<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, 1998.
/ / 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 02421
(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. [ ]
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2
The aggregate market value of the voting stock held by non-affiliates of the
Registrant, as of February 28, 1999, was approximately $17,823,904,334. 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 28, 1999:
336,184,525, consisting of 101,255,005 shares of Class A Common Stock and
234,929,520 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 Part I, Part II, Part IV
to Stockholders for the fiscal year
ended December 31, 1998.
Portions of the Proxy Statement for Part III
Raytheon's 1999 Annual Meeting
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, 1999
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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.
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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.
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1
EXHIBIT 99.1
RAYTHEON SAVINGS AND INVESTMENT PLAN
FINANCIAL STATEMENTS
TO ACCOMPANY 1998 FORM 5500
ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN
UNDER ERISA OF 1974
FOR THE YEAR ENDED DECEMBER 31, 1998
The supplemental schedules to the Plan's Form 5500 are not required since the
Plan's assets are held in a Master Trust. Accordingly, the Plan administrator
must file detailed financial information, including the supplemental schedules,
separately with the Department of Labor.
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2
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of
the Raytheon Savings and Investment Plan:
In our opinion, the accompanying statements of net assets available for plan
benefits and the related statement of changes in net assets available for plan
benefits present fairly, in all material respects, the net assets available for
benefits of the Raytheon Savings and Investment Plan (the "Plan") at December
31, 1998 and 1997, and the changes in net assets available for benefits for the
year ended December 31, 1998 in conformity with generally accepted accounting
principles. 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 of these statements in
accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 4, 1999
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3
RAYTHEON SAVINGS AND INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
as of December 31, 1998 and 1997
1998 1997
Assets:
Master trust investments:
At contract value (Notes B, E and I) $ 791,829,132 $ 772,455,041
At fair value (Notes B, F and I) 2,147,582,028 1,887,852,039
-------------- --------------
2,939,411,160 2,660,307,080
-------------- --------------
Receivables:
Accrued investment income and
other receivables 3,214,568 3,765,409
Transfer receivables (Note H) 3,824,865,272 -
Cash and cash equivalents 80,249,335 18,482,006
-------------- --------------
Total assets 6,847,740,335 2,682,554,495
-------------- --------------
Liabilities:
Payable for outstanding purchases 861,953 3,213,981
Accrued expenses and other payables 1,415,440 1,766,653
-------------- --------------
Total liabilities 2,277,393 4,980,634
-------------- --------------
Net assets available for plan benefits $6,845,462,942 $2,677,573,861
============== ==============
The accompanying notes are an integral part of the financial statements.
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4
RAYTHEON SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1998
Additions to net assets attributable to:
Investment income (Notes B, E and I):
Net appreciation of investments $ 274,186,504
Interest & Dividends 125,514,753
--------------
399,701,257
Contributions and deferrals:
Employee deferrals 139,261,693
Employer contributions 40,567,458
Transfers (Note G and H) 3,844,113,615
--------------
4,023,942,766
Total additions 4,423,644,023
--------------
Deductions from net assets attributable to:
Distributions to participants 226,235,565
Administrative expenses 228,714
Transfers (Note G) 29,290,663
Total deductions 255,754,942
--------------
Increase in net assets 4,167,889,081
Net assets, beginning of year 2,677,573,861
--------------
Net assets, end of year $6,845,462,942
==============
The accompanying notes are an integral part of the financial statements.
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5
RAYTHEON SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
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. As more fully
described in Note H, effective January 1, 1999, the participants and related
account balances of several defined contribution plans (collectively referred to
as "Prior Plans") were merged into the Plan.
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. Effective January 1, 1999, eligible employees may join the Plan
immediately, including employees from prior plans. 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 the Internal Revenue Code (the "Code"). In addition,
effective January 1, 1999, the merger of the Raytheon Stock Ownership Plan and
the Raytheon Stock Ownership Plan for Specified Hourly Payroll Employees
(collectively referred to as "prior ESOP plans") creates an additional employee
stock ownership portion (ESOP) of the Plan. The ESOP is intended to be an
employee stock ownership arrangement in compliance with all of the related
requirements for a qualified stock bonus plan as defined in 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. 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.
The Company contributes amounts equal to 50% of each participant's deferral, up
to a maximum of 3% of salary. The employee and Company contributions are
invested based on participant elections. For 1998, the annual employee deferral
for a participant cannot exceed $10,000. Rollover contributions from other
qualified plans are accepted by the Plan.
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6
Effective January 1, 1999, employees are allowed to defer up to 20% of their
compensation to the Plan, except for certain employees from Prior Plans who are
limited to 17%. Employee contributions, including rollovers, are invested based
on participant elections. The Company will match contribution amounts equal to
100% of each participant's deferral, up to a maximum of 4% of compensation. The
Company match shall be made to the Raytheon Common Stock Fund and must be held
in that fund until the beginning of the fifth Plan Year following the Plan Year
for which the contribution was made. The Company will also make an ESOP
contribution equal to one-half of one percent of the participant's compensation.
The ESOP portion of the Plan provides for investment, primarily in Raytheon
Company Class B common stock; however, as required by the Code, the Plan permits
limited diversification after a participant attains age 55 or completes 10 years
of plan participation (including participation in the prior ESOP plans).
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) the Fidelity Equity Income Fund which invests in shares of
a mutual fund consisting primarily of income-producing equity securities, (c) a
Raytheon Common Stock Fund which invests in shares of Raytheon Company 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)
the Fidelity Balanced Fund which invests in shares of a mutual fund consisting
primarily of equity securities, bonds and money market instruments, (f) the
Fidelity Magellan Fund, a growth fund which invests primarily in equities of
companies of all types and sizes, and (g) the Fidelity Blue Chip Fund, a growth
fund which invests primarily in equities of well known and established
companies. In addition, certain employees who transferred into the Plan were
allowed to maintain small balances in other fund options that become available
to all participants in 1999. Dividends and distributions from investments of all
fund options are reinvested in their respective funds; stock dividends, stock
splits and similar changes are also reflected in the funds.
Effective January 1, 1999, the Plan will offer several additional fund options
that were available in Prior Plans. These options include:
Templeton Foreign I Fund - a long-term capital growth fund which invests in
stocks and debt obligations of companies and governments of any nation.
Vanguard Morgan Growth Fund - investments consist primarily of common stocks of
corporations with either established growth patterns, emerging growth potential,
or cyclical growth patterns.
Vanguard Windsor Fund - investments consist of a portfolio of common stocks, the
objective of which is primarily long-term growth and secondarily, current income
through dividends.
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7
Vanguard Wellesley Income Fund - investments consist of about 60% fixed-income
securities and 40% common stocks. The Fund objective is primarily current income
through dividends, and secondarily, moderate capital growth.
T. Rowe Price Small Cap Stock Fund - invests in equity securities of small, high
growth potential companies.
RTN-A Wasting Fund and GMH Wasting Fund - hold shares of Raytheon Company Class
A common stock or General Motors Class H common stock, respectively, that were
transferred into the Plan from Prior Plans. These options will not be open for
additional contributions and will only be available through December 31, 2002.
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 completion of five years of service
or upon three years of Plan participation or upon retirement, death, disability,
or attainment of normal retirement age. Forfeitures of the non-vested portions
of terminated participants' accounts are used to reduce required contributions
of the Company.
Effective January 1, 1999, all employee and employer contributions and earnings
thereon are fully and immediately 100% vested.
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,
($5,000 effective January 1, 1999) 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.
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8
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 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
The Plan participants pay substantially all expenses of administering the Plan.
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. Contract values approximate fair value. Investments in mutual
funds and the commingled pool are valued a 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 the 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. Investment income
includes both dividends and interest income.
Benefits are recorded when paid.
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9
Certain items in the 1997 financial statements have been reclassified to conform
to the 1998 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 Internal Revenue Service has determined and informed the Company by letter
dated July 1995 that the Plan and related trust are designed in accordance with
applicable sections of the 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 applicable requirements of the 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.
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10
E. Investment Contracts:
The Plan invests in collateralized fixed income investment portfolios (with no
expiration date), which are managed by insurance companies and investment
management firms. 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, 1998:
Banker's Trust (WBS 92-485) 6.85% 6.85%
Metropolitan Life Insurance
Company (GIC GA-12908) 6.58% 6.58%
Metropolitan Life Insurance
Company (GIC GA-13659) 6.10% 6.10%
Prudential Asset Management
Company (GIC 917163-001) 6.75% 6.75%
Connecticut General (GIC 0025174) 5.58% 5.58%
Fidelity IPL (633-GCDC) 5.62% 5.62%
Monumental Life Insurance
Company (GIC BDA00463FR-00) 7.84% 7.84%
For the year ended December 31, 1997:
Banker's 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:
The Plan's trustee is Fidelity Management Trust Company (the "Trustee"). The
Trustee holds the funds for the Plan and is responsible for managing the Plan's
investment assets, executing all investment transactions, recording approved
transactions, and, therefore these transactions qualify as party-in-interest.
In accordance with the provisions of the Plan, the Trustee acts as the Plan's
agent for purchases and sales of shares of Raytheon Company common stock. These
transactions are performed on a Master Trust level. For the Master Trust,
purchases amounted to $288,116,995 and sales amounted to $257,878,566 for the
year ended December 31, 1998.
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11
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.
H. Transfer Receivables:
As part of an overall effort to minimize plan design differences and increase
administrative efficiencies, the Board of Directors of Raytheon Company voted on
December 16, 1998 to merge the participants and their account balances from
several Prior Plans into the Plan. The Prior Plans ceased to exist on December
31, 1998 and effective January 1, 1999 the plan provisions of the Plan govern.
The transfer receivable by Prior Plan is as follows:
Raytheon Salaried Savings and
Investment Plan $2,188,796,696
E-Systems, Inc. Employee Savings Plan 744,493,356
Raytheon TI Systems Savings Plan 255,787,439
Raytheon Savings and Investment Plan
for Specified Hourly Payroll Employees 233,308,197
Raytheon Stock Ownership Plan 219,416,215
Raytheon STX Corporation 401(k)
Retirement Plan 89,317,908
Raytheon California Hourly Savings
and Investment Plan 59,818,911
Raytheon Stock Ownership Plan for
Specified Hourly Payroll Employees 29,965,013
Standard Missile 401(k) Plan 3,961,537
--------------
Total $3,824,865,272
==============
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12
I. Fund Data:
The following is a summary of net assets available for plan benefits by
fund as of December 31, 1998:
<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:
Master trust investments:
At contract value:
Bankers Trust $278,760,941
Prudential Insurance
Company of America 139,592,355
Metropolitan Life
Insurance Company* 350,379,445
Fidelity 15,198,859
Connecticut General 3,851,325
Monumental Life
Insurance Company 4,046,207
At fair value:
Fidelity Equity
Income Fund* $691,209,765
Raytheon Company
Common Stock Fund* $356,701,412
BT Pyramid Equity
Index Fund* $519,296,605
Fidelity Balanced
Fund $126,343,413
Fidelity Magellan
Fund $135,325,150
Fidelity Blue
Chip Fund $191,248,790
Fidelity Retirement
Money Market
Vanguard Winsor
Vanguard Wellesley
TRP Small Cap Stock
Loans receivable
from participants
------------ ------------ ------------ ------------ ------------ ------------ ------------
Total investments 791,829,132 691,209,765 356,701,412 519,296,605 126,343,413 135,325,150 191,248,790
------------ ------------ ------------ ------------ ------------ ------------ ------------
Receivables:
Accrued investment income
and other receivables 2,118,587 1,095,981
Transfer receivables
Cash and cash equivalents 73,020,876 4,909,081 2,319,378
------------ ------------ ------------ ------------ ------------ ------------ ------------
Total assets 864,850,008 691,209,765 363,729,080 522,711,964 126,343,413 135,325,150 191,248,790
------------ ------------ ------------ ------------ ------------ ------------ ------------
Liabilities:
Payable for outstanding
purchases 861,953
Accrued expenses and other
payables 826,930 588,510
------------ ------------ ------------ ------------ ------------ ------------ ------------
Total liabilities - - 1,688,883 588,510 - - -
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net assets available for
plan benefits $864,850,008 $691,209,765 $362,040,197 $522,123,454 $126,343,413 $135,325,150 $191,248,790
============ ============ ============ ============ ============ ============ ============
<PAGE>
13
Templeton Retirement Vanguard Vanguard TRP
Foreign I Money Winsor Wellesley Cap Stock
Fund Market Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust
Prudential Life Insurance
Company of America
Metropolitan Life
Insurance Company*
Fidelity
Connecticut General
Monumental Life Insurance
Company
At fair value:
Fidelity Equity Income
Fund*
Raytheon Company Common
Stock Fund*
BT Pyramid Equity
Index Fund*
Fidelity Balanced Fund
Fidelity Magellan Fund
Templeton Foreign I Fund $ 52
Fidelity Retirement
Money Market $ 82,195
Vanguard Winsor $ 41
Vanguard Wellesley $ 18
TRP Small Cap Stock $ 348
Loans receivable from
participants
-------- ----------- -------- -------- --------
Total investments 52 82,195 41 18 348
-------- ----------- -------- -------- --------
Receivables:
Accrued investment income
and other receivables
Transfer receivables
Cash and cash equivalents
-------- ----------- -------- -------- --------
Total assets 52 82,195 41 18 348
-------- ----------- -------- -------- --------
Liabilities:
Payables for outstanding
purchases
Accrued expenses and
other payables
-------- ----------- -------- -------- --------
Total liabilities - - - - -
-------- ----------- -------- -------- --------
Net assets available for
plan benefits $ 52 $ 82,195 $ 41 $ 18 $ 348
======== =========== ======== ======== ========
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14
Loan
Fund Other(1) Total
<S> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust $ 278,760,941
Prudential Life Insurance
Company of America 139,592,355
Metropolitan Life
Insurance Company* 350,379,445
Fidelity 15,198,859
Connecticut General 3,851,325
Monumental Life Insurance
Company 4,046,207
At fair value:
Fidelity Equity Income
Fund* 691,209,765
Raytheon Company Common
Stock Fund* 356,701,412
BT Pyramid Equity
Index Fund* 519,296,605
Fidelity Balanced Fund 126,343,413
Fidelity Magellan Fund 135,325,150
Fidelity Blue Chip Fund 191,248,790
Templeton Foreign I Fund 52
Fidelity Retirement
Money Market 82,195
Vanguard Winsor 41
Vanguard Wellesley 18
TRP Small Cap Stock 348
Loans receivable from
participants $127,374,239 127,374,239
------------ -------------- --------------
Total investments 127,374,239 - 2,939,411,160
------------ -------------- --------------
Receivables:
Accrued investment income
and other receivables 3,214,568
Transfer receivables $3,824,865,272 3,824,865,272
Cash and cash equivalents 80,249,335
------------ -------------- --------------
Total assets 127,374,239 3,824,865,272 6,847,740,335
------------ -------------- --------------
Liabilities:
Payables for outstanding
purchases 861,953
Accrued expenses and
other payables 1,415,440
------------ -------------- --------------
Total liabilities - - 2,277,393
------------ -------------- --------------
Net assets available for
plan benefits $127,374,239 $3,824,865,272 $6,845,462,942
============ ============== ==============
(1) See Note H.
</TABLE>
<PAGE>
15
I. 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 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* $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>
16
Blue Chip Loan
Fund 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 participant $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>
17
I. Fund Data, Continued:
<TABLE>
<CAPTION>
The following is a summary of changes in net assets available for plan
benefits by fund for the year ended December 31, 1998:
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>
Additions to net assets
attributable to:
Investment income:
Net appreciation of
investments $ 7,968 $ 39,869,117 $ 46,093,769 $116,015,605 $ 8,737,847 $ 23,704,822 $ 35,513,033
Interest & Dividends 52,236,404 40,677,644 487 11,799,209 5,735,292 7,005,152
----------- ------------ ------------ ------------ ------------ ------------ ------------
52,244,372 80,546,761 46,094,256 116,015,605 20,537,056 29,440,114 42,518,185
----------- ------------ ------------ ------------ ------------ ------------ ------------
Contributions and deferrals:
Employee deferrals 34,393,979 30,611,637 19,742,509 24,215,193 7,352,853 10,245,680 12,699,583
Employer contributions 9,772,937 9,247,861 6,058,288 7,160,853 2,130,456 2,735,723 3,461,156
Transfers 688,904 433,952 390,442 81,659 292,867
------------ ------------ ------------ ----------- ------------ ------------ ------------
44,855,820 40,293,450 25,800,797 31,766,488 9,564,968 13,274,270 16,160,739
------------ ------------ ------------ ------------ ------------ ------------ ------------
Total additions 97,100,192 120,840,211 71,895,053 147,782,093 30,102,024 42,714,384 58,678,924
------------ ------------ ------------ ------------ ------------ ------------ ------------
Deductions from net assets
attributable to:
Distributions to
participants 92,915,405 47,496,188 20,966,864 29,985,617 7,923,978 6,806,225 8,887,855
Administrative expenses 68,305 61,171 34,400 37,925 9,103 7,397 10,413
Transfers 9,832,382 6,519,835 3,644,315 4,904,260 1,139,553 1,464,607 1,785,711
------------ ------------ ----------- ------------- ------------ ------------ ------------
Total deductions 102,816,092 54,077,194 24,645,579 34,927,802 9,072,634 8,278,229 10,683,979
------------ ------------ ----------- ------------- ------------ ------------ ------------
Interfund transfers 90,500,726 (78,365,183) (68,957,709) (5,011,707) 5,689,819 26,916,689 38,670,396
------------ ------------ ----------- ------------- ------------ ------------ ------------
Increase(decrease) in
net assets 84,784,826 (11,602,166) (21,708,235) 107,842,584 26,719,209 61,352,844 86,665,341
Net assets, beginning
of year 780,065,182 702,811,931 383,748,432 414,280,870 99,624,204 73,972,306 104,583,449
------------ ------------ ----------- ------------ ------------ ------------ ------------
Net assets, end of year $864,850,008 $691,209,765 $362,040,197 $522,123,454 $126,343,413 $135,325,150 $191,248,790
============ ============ ============ ============ ============ ============ ============
<PAGE>
18
Templeton Retirement Vanguard Vanguard TRP
Foreign I Money Winsor Wellesley Cap Stock
Fund Market Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C>
Assets:
<S>
Additions to net assets
attributable to:
Investment income:
Net appreciation of
investments $ $ 2,864,378 $ 1,379,950 $ 15
Interest & Dividends - $ 1,231
---------- ------------ ----------- ----------- ---------
- 1,231 2,864,378 1,379,950 15
---------- ------------ ----------- ----------- ---------
Contributions and deferrals:
Employee deferrals 32 18 18 191
Employer contributions 20 22 142
Transfers 10,958 (2,864,377) (1,379,950)
------------ ------------ ----------- ----------- ---------
52 10,958 (2,864,337) (1,379,932) 333
------------ ------------ ----------- ----------- ---------
Total additions 52 12,189 41 18 348
------------ ------------ ----------- ----------- ---------
Deductions from net assets
attributable to:
Distributions to
participants (84)
Administrative expenses
Transfers
------------ ------------ ----------- ----------- ---------
Total deductions - (84) - - -
------------ ------------ ----------- ----------- ---------
Interfund transfers 69,922
------------ ------------ ----------- ----------- ---------
Increase/(Decrease) in
net assets 52 82,195 41 18 348
Net assets, beginning
of year
------------ ------------ ----------- ------------- ---------
Net assets, end of year $ 52 $ 82,195 $ 41 $ 18 $ 348
============ ============ =========== ============= =========
<PAGE>
19
Loan
Fund Other(1) Total
<S> <C> <C> <C>
Additions to net assets
attributable to:
Investment income:
Net appreciation of
investments $ 274,186,504
Interest & Dividends $ 8,059,334 125,514,753
------------ ------------- --------------
8,059,334 399,701,257
------------ ------------- --------------
Contributions and deferrals:
Employee deferrals 139,261,693
Employer contributions 40,567,458
Transfers 21,593,888 $3,824,865,272 3,844,113,615
----------- -------------- --------------
21,593,888 3,824,865,272 4,023,942,766
----------- ------------- --------------
Total additions 29,653,222 3,824,865,272 4,423,644,023
----------- -------------- --------------
Deductions from net assets
attributable to:
Distributions to
participants 11,253,517 226,235,565
Administrative expenses 228,714
Transfers 29,290,663
------------ -------------- --------------
Total deductions 11,253,517 - 255,754,942
------------ -------------- --------------
Interfund transfers (9,512,953)
------------ -------------- --------------
Increase/(Decrease) in net assets 8,886,752 3,824,865,272 4,167,889,081
Net assets, beginning
of year 118,487,487 2,677,573,861
------------ -------------- --------------
Net assets, end of year $127,374,239 $3,824,865,272 $6,845,462,942
============ ============== =============
(1) See Note H
</TABLE>
<PAGE>
20
J. Master Trust:
All plan investments are included under the Master Trust. At December 31, 1998,
assets of the Plan represented 95.9% of the total assets under the Master Trust.
This has decreased from 76.2% at December 31, 1997.
The following is a summary of net assets available for plan benefits by
fund under the Master Trust as of December 31, 1998:
<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* $ 473,258,791
Prudential Life Insurance
Company of America 236,989,116
Metropolitan Life
Insurance Company* 594,847,154
Fidelity 25,803,449
Connecticut General 6,538,482
Monumental Life Insurance
Company 6,869,338
At fair value:
Fidelity Equity Income
Fund* $1,464,615,296
Raytheon Company Common
Stock Fund* $ 799,542,751
BT Pyramid Equity
Index Fund* $ 745,602,791
Fidelity Balanced Fund* $ 442,796,289
Fidelity Magellan Fund* $ 379,680,454
Fidelity Blue Chip Fund*
Templeton Foreign I Fund
Fidelity Investment Grade
Bond Fund
Fidelity Retirement
Money Market
Vanguard Winsor
Vanguard Wellesley
TRP Small Cap Stock
Raytheon Class A Wasting
Stock Fund
Raytheon GMH Wasting
Stock Fund
Loans receivable from
participants
-------------- -------------- -------------- -------------- -------------- --------------
Total investments 1,344,306,330 1,464,615,296 799,542,751 745,602,791 442,796,289 379,680,454
-------------- -------------- -------------- -------------- -------------- --------------
Receivables:
Employer contribution
Accrued investment income
and other receivables 4,748,948 1,573,604
Transfer receivables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803
Cash and cash equivalents 123,969,201 11,004,025 3,330,147
-------------- -------------- -------------- -------------- -------------- --------------
Total assets 2,048,537,201 2,226,757,712 1,255,380,751 967,248,229 755,173,618 616,369,257
-------------- -------------- -------------- -------------- -------------- --------------
Liabilities:
Payable for outstanding
purchases 1,932,125
Accrued expenses and
other payables 1,853,618 844,977
Transfer payables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803
-------------- -------------- -------------- -------------- -------------- --------------
Total liabilities 580,261,670 762,142,416 443,870,770 217,586,664 312,377,329 236,688,803
-------------- -------------- -------------- -------------- -------------- --------------
Net assets available for
plan benefits $1,468,275,531 $1,464,615,296 $ 811,509,981 $ 749,661,565 $ 442,796,289 $ 379,680,454
============== ============== ============== ============== ============== ==============
<PAGE>
21
Templeton Investment Retirement Vanguard Vanguard
Blue Chip Foreign I Grade Money Winsor Wellesley
Fund Fund Bond Fund Market Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust*
Prudential Life Insurance
Company of America
Metropolitan Life
Insurance Company*
Fidelity
Connecticut General
Monumental Life Insurance
Company
At fair value:
Fidelity Equity Income
Fund*
Raytheon Company Common
Stock Fund*
BT Pyramid Equity
Index Fund*
Fidelity Balanced Fund*
Fidelity Magellan Fund*
Fidelity Blue Chip Fund* $ 391,787,509
Templeton Foreign I Fund $ 6,966,704
Fidelity Investment Grade
Bond Fund $ -
Fidelity Retirement
Money Market $ 13,202,524
Vanguard Winsor $ 41
Vanguard Wellesley $ 18
TRP Small Cap Stock
Raytheon Class A Wasting
Stock Fund
Raytheon GMH Wasting
Stock Fund
Loans receivable from
participants
-------------- -------------- -------------- ------------- ------------- --------------
Total investments 391,787,509 6,966,704 - 13,202,524 41 18
-------------- -------------- -------------- ------------- ------------- --------------
Receivables:
Employer contribution 3,595,261
Accrued investment income
and other receivables
Transfer receivables 191,269,141 6,966,652 16,715,590
Cash and cash equivalents
-------------- -------------- -------------- ------------- ------------- --------------
Total assets 583,056,650 13,933,356 - 33,513,375 41 18
-------------- -------------- -------------- ------------- ------------- --------------
Liabilities:
Payable for outstanding
purchases
Accrued expenses and
other payables
Transfer payables 191,269,141 6,966,652 16,715,590
-------------- -------------- -------------- ------------- ------------- --------------
Total liabilities 191,269,141 6,966,652 - 16,715,590 - -
-------------- -------------- -------------- ------------- ------------- --------------
Net assets available for
plan benefits $ 391,787,509 $ 6,966,704 $ - $ 16,797,785 $ 41 $ 18
============== ============== ============== ============== ============== ==============
<PAGE>
22
TRP Small RTN.A GMH
Cap Stock Wasting Wasting Loan
Fund Fund Fund Fund Other(1) Total
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $ 473,258,791
Prudential Life Insurance
Company of America 236,989,116
Metropolitan Life
Insurance Company* 594,847,154
Fidelity 25,803,449
Connecticut General 6,538,482
Monumental Life Insurance
Company 6,869,338
At fair value:
Fidelity Equity Income
Fund* 1,464,615,296
Raytheon Company Common
Stock Fund* 799,542,751
BT Pyramid Equity
Index Fund* 745,602,791
Fidelity Balanced Fund* 442,796,289
Fidelity Magellan Fund* 379,680,454
Fidelity Blue Chip Fund* 391,787,509
Templeton Foreign I Fund 6,966,704
Fidelity Investment Grade
Bond Fund -
Fidelity Retirement
Money Market 13,202,524
Vanguard Winsor 41
Vanguard Wellesley 18
TRP Small Cap Stock $ 348 348
Raytheon Class A Wasting
Stock Fund $ 116,129,149 116,129,149
Raytheon GMH Wasting
Stock Fund $ 172,859,819 172,859,819
Loans receivable from
participants $ 250,687,865 250,687,865
-------------- -------------- -------------- -------------- ------------- --------------
Total investments 348 116,129,149 172,859,819 250,687,865 - 6,128,177,888
-------------- -------------- -------------- -------------- ------------- --------------
Receivables:
Employer contribution 3,595,261
Accrued investment income
and other receivables 1,193,397 23,640 7,539,589
Transfer receivables 120,761,325 178,295,618 117,046,618 $ 855,826,675 4,035,178,551
Cash and cash equivalents 3,480,490 5,474,220 147,258,083
-------------- -------------- -------------- ------------- -------------- --------------
Total assets 348 241,564,361 356,653,297 367,734,483 855,826,675 10,321,749,372
-------------- -------------- -------------- ------------- -------------- --------------
Liabilities:
Payable for outstanding
purchases 1,932,125
Accrued expenses and
other payables 41,711 62,061 2,802,367
Transfer payables 120,761,325 178,295,618 117,046,618 3,179,351,876
-------------- -------------- -------------- ------------- -------------- --------------
Total liabilities - 120,803,036 178,357,679 117,046,618 - 3,184,086,368
-------------- -------------- -------------- ------------- -------------- --------------
Net assets available for
plan benefits $ 348 $120,761,325 $ 178,295,618 $ 250,687,865 $ 855,826,675 $7,137,663,004
============== ============== ============== ============== ============== ==============
Percentage of Master Trust that are Plan assets - 95.9%
*Represent more than 5% of net assets available for plan benefits
(1) Other represents Raytheon plans merging in from outside the Master Trust.
Note: Not all funds within the Master Trust are available options to
participants in the Plan.
</TABLE>
<PAGE>
23
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, 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:
Investments:
At contract value:
Bankers Trust* $351,035,073
Prudential Life 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 Fund* $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
============ ============ ============ ============ ============ ===========
<PAGE>
24
Templeton Investment Retirement
Blue Chip Foreign I Grade Money Loan
Fund Fund Bond Fund Market Fund Fund Total
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $351,035,073
Prudential Life 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 Fund* 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 - 76.2%
*Represent more than 5% of net assets available for plan benefits
Note: Not all funds within the Master Trust are available options to
participants in the Plan.
</TABLE>
<PAGE>
25
J. Master Trust, Continued:
The following is a summary of investment income by fund under the
Master Trust for the year ended December 31, 1998:
<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>
Investment income:
Net appreciation
(depreciation) of assets $ 30,695 $ 49,019,748 $74,202,083 $149,571,006 $16,091,158 $62,195,801
Interest & Dividends 81,886,632 86,279,682 1,792 42,537,357 13,255,763
----------- ------------ ----------- ------------ ----------- -----------
Total investment
income/(loss) $81,917,327 $135,299,430 $74,203,875 $149,571,006 $58,628,515 $75,451,564
=========== ============ =========== ============ =========== ===========
<PAGE>
26
Templeton Investment Retirement Vanguard Vanguard
Blue Chip Foreign I Grade Money Winsor Wellesley
Fund Fund Bond Fund Market Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Net appreciation
(depreciation) of assets $60,264,181 $(1,095,980) $ 17,635 $2,864,378 $1,379,950
Interest & Dividends 13,550,491 752,610 162,858 $ 349,740
----------- ----------- -------- ---------- ---------- ----------
Total investment
income/(loss) $73,814,672 $ (343,370) $180,493 $ 349,740 $2,864,378 $1,379,950
=========== =========== ======== ========== ========== ==========
<PAGE>
27
TRP Small RTN.A GMH
Cap Stock Wasting Wasting Loan
Fund Fund Fund Fund Total
<S> <C> <C> <C> <C> <C>
Investment income:
Net appreciation
(depreciation) of assets $ 15 $ (35,268) $44,604,025 $459,109,427
Interest & Dividends $15,334,403 254,111,328
----------- ---------- ----------- ----------- ------------
Total investment
income/(loss) $ 15 $ (35,268) $44,604,025 $15,334,403 $713,220,755
=========== ========== =========== =========== ============
</TABLE>
<PAGE>
1
EXHIBIT 99.1a
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (File No. 333-56117) of Raytheon Company of our report
dated June 4, 1999 relating to the financial statements of the Raytheon Savings
and Investment Plan, which appears in this Form 10-K/A.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 29, 1999
<PAGE>
1
EXHIBIT 99.6
RAYTHEON TI SYSTEMS SAVINGS PLAN
FINANCIAL STATEMENTS
TO ACCOMPANY 1998 FORM 5500
ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN
UNDER ERISA OF 1974
FOR THE YEAR ENDED DECEMBER 31, 1998
The supplemental schedules to the Plan's Form 5500 are not required since the
Plan's assets are held in a Master Trust. Accordingly, the Plan administrator
must file detailed financial information, including the supplemental schedules,
separately with the Department of Labor.
<PAGE>
2
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of
the Raytheon TI Systems Savings Plan:
In our opinion, the accompanying statements of net assets available for plan
benefits and the related statement of changes in net assets available for plan
benefits present fairly, in all material respects, the net assets available for
benefits of the Raytheon TI Systems Savings Plan (the "Plan") at December 31,
1998 and 1997, and the changes in net assets available for benefits for the year
ended December 31, 1998 in conformity with generally accepted accounting
principles. 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 of these statements in
accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
As discussed in Notes A and H to the financial statements, the Board of
Directors of Raytheon Company voted on December 16, 1998, to merge the Plan into
the Raytheon Savings and Investment Plan.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 4, 1999
<PAGE>
3
RAYTHEON TI SYSTEMS SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
as of December 31, 1998 and 1997
1998 1997
Assets:
Master trust investments:
At contract value (Notes B, E and I) $ 36,008,015 $ 27,129,250
At fair value (Notes B, F and I) 215,389,507 151,647,372
------------ ------------
251,397,522 178,776,622
------------ ------------
Receivables:
Accrued investment income and
other receivables 422,047 528,072
Cash and cash equivalents 4,278,946 1,673,631
------------ ------------
Total assets 256,098,515 180,978,325
------------ ------------
Liabilities:
Payable for outstanding purchases 132,047 533,996
Accrued expenses and other payables 179,030 192,678
Transfer payables (Note H) 255,787,438
------------ ------------
Total liabilities 256,098,515 726,674
------------ ------------
Net assets available for plan benefits $ - $180,251,651
============ ============
The accompanying notes are an integral part of the financial statements.
<PAGE>
4
RAYTHEON TI SYSTEMS SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1998
Additions to net assets attributable to:
Investment income (Notes B, E and I):
Net appreciation of investments $ 25,229,092
Interest & Dividends 8,294,811
------------
33,523,903
Contributions and deferrals:
Employee deferrals 43,369,679
Employer contributions 8,443,415
Transfers (Note G) 32,797
------------
51,845,891
Total additions 85,369,794
------------
Deductions from net assets attributable to:
Distributions to participants 9,757,925
Administrative expenses 16,103
Transfers (Note G and H) 255,847,417
------------
Total deductions 265,621,445
------------
Decrease in net assets (180,251,651)
Net assets, beginning of year 180,251,651
------------
Net assets, end of year $ -
============
The accompanying notes are an integral part of the financial statements.
<PAGE>
5
RAYTHEON TI SYSTEMS SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
A. Description of Plan:
General
As more fully described in Note H, the Raytheon TI Systems Savings Plan (the
"Plan") ceased to exist as of December 31, 1998 and effective January 1, 1999,
was merged into the Raytheon Savings and Investment Plan (RAYSIP). The following
description of the Plan provides only general information that is applicable
through December 31, 1998. Participants should refer to the plan document for a
complete description of the Plan's provisions.
The Plan was established on July 11, 1997 for former employees of Texas
Instruments. The Plan is a defined contribution plan covering certain employees
of Raytheon Company (the "Company"). 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 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 combined with the investments of other similar
defined contribution plans of the Company into the Raytheon Company Master Trust
for Defined Contribution Plans ("Master Trust"). 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. For 1998, the annual employee
deferral for a participant cannot exceed $10,000. 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) the Fidelity Equity Income Fund which invests
in shares of a mutual fund consisting primarily of income-producing equity
securities, (c) a Raytheon Common Stock Fund which invests in shares of Raytheon
Company 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) the Fidelity Balanced Fund which invests
<PAGE>
6
in shares of a mutual fund consisting primarily of equity securities, bonds and
money market instruments, (f) the Fidelity Magellan Fund, a growth fund which
invests primarily in equities of companies of all types and sizes, (g) the
Fidelity 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 Fidelity Investment Grade
Bond Fund which invests primarily in U.S. government and corporate bonds
including, without limitation, index funds and mutual funds. The Fidelity
Investment Grade Bond Fund was eliminated as an option during 1998 and balances
were transferred into the Fixed Income Fund. Dividends and distributions from
investments of the Fidelity Equity Income Fund, the Raytheon Common Stock Fund,
the Stock Index Fund, the Fidelity Balanced Fund, the Fidelity Magellan Fund,
the Fidelity Blue Chip Fund, the Templeton Foreign I Fund and the Fidelity
Investment Grade Bond 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 fully and immediately vested in their entire account balance
including voluntary deferrals, employer contributions and all investment
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 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.
<PAGE>
7
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. Contract value approximates 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. Participant loans are valued at cost, which approximates fair value.
Security transactions are recorded on the 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. Investment income
includes both dividends and interest income.
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.
<PAGE>
8
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 Internal Revenue Service has determined and informed the Company by letter
dated March 1999 that the Plan, as adopted on July 11, 1997, and related trust
are designed in accordance with applicable sections of the Code. The Plan has
been amended since applying for 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 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, 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 the Code.
E. Investment Contracts:
The Plan invests in collateralized fixed income investment portfolios which are
managed by insurance companies and investment management firms. 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>
9
Annualized Credited
Average Yield Interest Rate
For the year ended December 31, 1998:
Banker's Trust (WBS 92-485) 6.85% 6.85%
Metropolitan Life Insurance
Company (GIC GA-12908) 6.58% 6.58%
Metropolitan Life Insurance
Company (GIC GA-13659) 6.10% 6.10%
Prudential Asset Management
Company (GIC 917163-001) 6.75% 6.75%
Connecticut General (GIC 0025174) 5.58% 5.58%
Fidelity IPL (633-GCDC) 5.62% 5.62%
Monumental Life Insurance
Company (GIC BDA00463FR-00) 7.84% 7.84%
For the year ended December 31, 1997:
Banker's 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:
The Plan's trustee is Fidelity Management Trust Company (the "Trustee"). The
Trustee holds the funds for the Plan and is responsible for managing the Plan's
investment assets, executing all investment transactions, recording approved
transactions, and, therefore these transactions qualify as party-in-interest.
In accordance with the provisions of the Plan, the Trustee acts as the Plan's
agent for purchases and sales of shares of Raytheon Company common stock. These
transactions are performed on a Master Trust level. For the Master Trust,
purchases amounted to $288,116,995 and sales amounted to $257,878,566 for the
year ended December 31, 1998.
G. Transfers:
Transfers include transfers of participant accounts, individually and/or
in-groups, between the 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 Plan and similar savings plans of
other companies for those participants who changed companies during the year.
H. Transfer Payables:
As part of an overall effort to minimize plan design differences and increase
administrative efficiencies, the Board of Directors of Raytheon Company voted on
December 16, 1998 to merge the participants and their account balances into the
RAYSIP. The Plan ceased to exist on December 31, 1998 and effective January 1,
1999, the plan provisions of the RAYSIP govern. The transfer payable amount
represents a complete transfer of assets to the RAYSIP.
<PAGE>
10
I. Fund Data:
The following is a summary of net assets available for plan benefits by
fund as of December 31, 1998:
<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:
Master trust investments:
At contract value:
Bankers Trust $ 12,676,508
Prudential Life Insurance
Company of America 6,347,889
Metropolitan Life
Insurance Company 15,933,322
Fidelity 691,160
Connecticut General 175,137
Monumental Life
Insurance Company 183,999
At fair value:
Fidelity Equity
Income Fund $ 17,276,885
Raytheon Company
Common Stock Fund $54,644,741
BT Pyramid Equity
Index Fund $46,192,796
Fidelity Balanced
Fund $13,627,478
Fidelity Magellan
Fund $19,552,160
Chip Fund $41,109,867
Templeton Foreign I
Fund
Loans receivable
from participants
------------ ----------- ----------- ----------- ----------- ----------- -----------
Total investments 36,008,015 17,276,885 54,644,741 46,192,796 13,627,478 19,552,160 41,109,867
------------ ----------- ----------- ----------- ----------- ----------- -----------
Receivables:
Accrued investment income
and other receivables 324,556 97,491
Cash and cash equivalents 3,320,586 752,045 206,315
------------ ----------- ----------- ----------- ----------- ----------- -----------
Total assets 39,328,601 17,276,885 55,721,342 46,496,602 13,627,478 19,552,160 41,109,867
------------ ----------- ----------- ----------- ----------- ----------- -----------
Liabilities:
Payable for outstanding
purchases 132,047
Accrued expenses and other
payables 126,681 52,349
Transfer payables 39,328,601 17,276,885 55,462,614 46,444,253 13,627,478 19,552,160 41,109,867
------------ ----------- ----------- ----------- ----------- ----------- -----------
Total liabilities 39,328,601 17,276,885 55,721,342 46,496,602 13,627,478 19,552,160 41,109,867
------------ ----------- ----------- ----------- ----------- ----------- -----------
Net assets available for
plan benefits $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
============ =========== =========== ========== =========== =========== ===========
<PAGE>
11
Templeton
Foreign I Loan
Account Fund Total
<S> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust $ 12,676,508
Prudential Insurance
Company of America 6,347,889
Metropolitan Life
Insurance Company 15,933,322
Fidelity 691,160
Connecticut General 175,137
Monumental Life
Insurance Company 183,999
At fair value:
Fidelity Equity
Income Fund 17,276,885
Raytheon Company
Common Stock Fund 54,644,741
BT Pyramid Equity
Index Fund 46,192,796
Fidelity Balanced
Fund 13,627,478
Fidelity Magellan
Fund 19,552,160
Fidelity Blue
Chip Fund 41,109,867
Templeton Foreign I
Fund $ 6,966,650 6,966,650
Loans receivable
from participants $16,018,930 16,018,930
----------- ----------- ------------
Total investments 6,966,650 16,018,930 251,397,522
----------- ----------- ------------
Receivables:
Accrued investment income
and other receivables 422,047
Cash and cash equivalents 4,278,946
----------- ----------- ------------
Total assets 6,966,650 16,018,930 256,098,515
----------- ----------- ------------
Liabilities:
Payable for outstanding
purchases 132,047
Accrued expenses and
other payables 179,030
Transfer payables 6,966,650 16,018,930 255,787,438
----------- ----------- ------------
Total liabilities 6,966,650 16,018,930 256,098,515
----------- ----------- ------------
Net assets available for
plan benefits $ 0 $ 0 $ 0
=========== =========== ============
</TABLE>
<PAGE>
12
I. 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 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>
13
Templeton Investment
Blue Chip Foreign I Grade Loan
Fund Fund Bond Fund Fund Total
<S> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $ 10,132,377
Prudential Life 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 Fund* 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
============ ========== ========== ============ ============
*Represent more than 5% of net assets available for plan benefits
</TABLE>
<PAGE>
14
<TABLE>
<CAPTION>
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, 1998:
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>
Additions to net assets
attributable to:
Investment income:
Net appreciation
(depreciation) of
investments $ 3,295 $ 584,690 $ 5,158,554 $ 9,280,287 $ 829,007 $ 3,117,037 $ 7,334,555
Interest & Dividends 1,993,246 874,982 1,116,139 717,602 1,421,709
----------- ------------ ----------- ----------- ----------- ------------ ------------
1,996,541 1,459,672 5,158,554 9,280,287 1,945,146 3,834,639 8,756,264
----------- ------------ ----------- ----------- ----------- ------------ ------------
Contributions and deferrals:
Employee deferrals 6,104,144 5,975,544 3,061,022 7,954,043 2,632,497 5,181,263 8,707,144
Employer contributions 1,130,391 1,217,093 659,688 1,608,662 479,166 944,884 1,701,689
Transfers 14,206 42,771 3,898 (12,411) (1,814) (1,765)
------------ ------------ ----------- ----------- ----------- ------------ ------------
7,248,741 7,235,408 3,724,608 9,550,294 3,111,663 6,124,333 10,407,068
------------ ------------ ----------- ----------- ----------- ------------ ------------
Total additions 9,245,282 8,695,080 8,883,162 18,830,581 5,056,809 9,958,972 19,163,332
------------ ------------ ----------- ----------- ----------- ------------ ------------
Deductions from net assets
attributable to:
Distributions to
participants 1,860,825 745,470 1,703,163 1,536,525 675,276 535,393 1,528,144
Administrative expenses 2,492 940 5,698 2,756 767 764 1,998
Transfers (13,295) 27,074 62,761
Transfers plan mergers 39,328,602 17,276,885 55,462,614 46,444,253 13,627,478 19,552,160 41,109,867
------------ ------------ ----------- ------------ ----------- ------------ ------------
Total deductions 41,191,919 18,010,000 57,198,549 48,046,295 14,303,521 20,088,317 42,640,009
------------ ------------ ----------- ------------ ----------- ------------ ------------
Interfund transfers 4,550,112 1,060,820 (15,443,534) 1,506,164 1,608,070 3,494,192 4,716,038
------------ ------------ ----------- ------------ ----------- ------------ ------------
Decrease in net assets (27,396,525) (8,254,100) (63,758,921) (27,709,550) (7,638,642) (6,635,153) (18,760,639)
Net assets, beginning
of year 27,396,525 8,254,100 63,758,921 27,709,550 7,638,642 6,635,153 18,760,639
------------ ------------ ----------- ----------- ------------ ------------ ------------
Net assets, end of year $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
============ ============ =========== =========== ============ ============ ============
<PAGE>
15
Templeton Investment
Foreign I Grade Bond Loan
Fund Fund Fund Total
<S> <C> <C> <C> <C>
Additions to net assets
attributable to:
Investment income:
Net appreciation
(depreciation) of
investments $(1,095,967) $ 17,634 $ 25,229,092
Interest & Dividends 752,610 162,858 $ 1,255,665 8,294,811
----------- ------------ ------------ -------------
(343,357) 180,492 1,255,665 33,523,903
----------- ------------ ------------- -------------
Contributions and deferrals:
Employee deferrals 2,897,062 856,960 43,369,679
Employer contributions 598,350 103,492 8,443,415
Transfers (12,088) 32,797
---------- ------------ ------------- -------------
3,495,412 960,452 (12,088) 51,845,891
----------- ------------ ------------- -------------
Total additions 3,152,055 1,140,944 1,243,577 85,369,794
----------- ------------ ------------- -------------
Deductions from net assets
attributable to:
Distributions to
participants 274,069 123,832 775,228 9,757,925
Administrative expenses 514 174 16,103
Transfers (16,562) 59,978
Transfers plan mergers 6,966,650 16,018,930 255,787,439
----------- ------------ -------------- -------------
Total deductions 7,241,233 124,006 16,777,596 265,621,445
----------- ------------ -------------- -------------
Interfund transfers (1,381,998) (2,565,063) 2,455,199
----------- ----------- -------------- -------------
Decrease in net assets (5,471,176) (1,548,125) (13,078,820) (180,251,651)
----------- ----------- -------------- -------------
Net assets, beginning
of year 5,471,176 1,548,125 13,078,820 180,251,651
------------ ----------- -------------- -------------
Net assets, end of year $ 0 $ 0 $ 0 $ 0
============ =========== ============= =============
</TABLE>
<PAGE>
16
J. Master Trust:
All plan investments are included under the Master Trust. At December 31,
1998, assets of the Plan represented 0% of the total assets under the
Master Trust. This has decreased from 5.1% at December 31, 1997.
The following is a summary of net assets available for plan benefits by
fund under the Master Trust as of December 31, 1998:
<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* $ 473,258,791
Prudential Life Insurance
Company of America 236,989,116
Metropolitan Life
Insurance Company* 594,847,154
Fidelity 25,803,449
Connecticut General 6,538,482
Monumental Life Insurance
Company 6,869,338
At fair value:
Fidelity Equity Income
Fund* $1,464,615,296
Raytheon Company Common
Stock Fund* $ 799,542,751
BT Pyramid Equity
Index Fund* $ 745,602,791
Fidelity Balanced Fund* $ 442,796,289
Fidelity Magellan Fund* $ 379,680,454
Fidelity Blue Chip Fund*
Templeton Foreign I Fund
Fidelity Investment Grade
Bond Fund
Fidelity Retirement
Money Market
Vanguard Winsor
Vanguard Wellesley
TRP Small Cap Stock
Raytheon Class A Wasting
Stock Fund
Raytheon GMH Wasting
Stock Fund
Loans receivable from
participants
-------------- -------------- -------------- -------------- -------------- --------------
Total investments 1,344,306,330 1,464,615,296 799,542,751 745,602,791 442,796,289 379,680,454
-------------- -------------- -------------- -------------- -------------- --------------
Receivables:
Employer contribution
Accrued investment income
and other receivables 4,748,948 1,573,604
Transfer receivables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803
Cash and cash equivalents 123,969,201 11,004,025 3,330,147
-------------- -------------- -------------- -------------- -------------- --------------
Total assets 2,048,537,201 2,226,757,712 1,255,380,751 967,248,229 755,173,618 616,369,257
-------------- -------------- -------------- -------------- -------------- --------------
Liabilities:
Payable for outstanding
purchases 1,932,125
Accrued expenses and
other payables 1,853,618 844,977
Transfer payables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803
-------------- -------------- -------------- -------------- -------------- --------------
Total liabilities 580,261,670 762,142,416 443,870,770 217,586,664 312,377,329 236,688,803
-------------- -------------- -------------- -------------- -------------- --------------
Net assets available for
plan benefits $1,468,275,531 $1,464,615,296 $ 811,509,981 $ 749,661,565 $ 442,796,289 $ 379,680,454
============== ============== ============== ============== ============== ==============
<PAGE>
17
Templeton Investment Retirement Vanguard Vanguard
Blue Chip Foreign I Grade Money Winsor Wellesley
Fund Fund Bond Fund Market Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust*
Prudential Life Insurance
Company of America
Metropolitan Life
Insurance Company*
Fidelity
Connecticut General
Monumental Life Insurance
Company
At fair value:
Fidelity Equity Income
Fund*
Raytheon Company Common
Stock Fund*
BT Pyramid Equity
Index Fund*
Fidelity Balanced Fund*
Fidelity Magellan Fund*
Fidelity Blue Chip Fund* $ 391,787,509
Templeton Foreign I Fund $ 6,966,704
Fidelity Investment Grade
Bond Fund $ -
Fidelity Retirement
Money Market $ 13,202,524
Vanguard Winsor $ 41
Vanguard Wellesley $ 18
TRP Small Cap Stock
Raytheon Class A Wasting
Stock Fund
Raytheon GMH Wasting
Stock Fund
Loans receivable from
participants
-------------- -------------- -------------- ------------- ------------- --------------
Total investments 391,787,509 6,966,704 - 13,202,524 41 18
-------------- -------------- -------------- ------------- ------------- --------------
Receivables:
Employer contribution 3,595,261
Accrued investment income
and other receivables
Transfer receivables 191,269,141 6,966,652 16,715,590
Cash and cash equivalents
-------------- -------------- -------------- ------------- ------------- --------------
Total assets 583,056,650 13,933,356 - 33,513,375 41 18
-------------- -------------- -------------- ------------- ------------- --------------
Liabilities:
Payable for outstanding
purchases
Accrued expenses and
other payables
Transfer payables 191,269,141 6,966,652 16,715,590
-------------- -------------- -------------- ------------- ------------- --------------
Total liabilities 191,269,141 6,966,652 - 16,715,590 - -
-------------- -------------- -------------- ------------- ------------- --------------
Net assets available for
plan benefits $ 391,787,509 $ 6,966,704 $ - $ 16,797,785 $ 41 $ 18
============== ============== ============== ============== ============== ==============
<PAGE>
18
TRP Small RTN.A GMH
Cap Stock Wasting Wasting Loan
Fund Fund Fund Fund Other(1) Total
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $ 473,258,791
Prudential Life Insurance
Company of America 236,989,116
Metropolitan Life
Insurance Company* 594,847,154
Fidelity 25,803,449
Connecticut General 6,538,482
Monumental Life Insurance
Company 6,869,338
At fair value:
Fidelity Equity Income
Fund* 1,464,615,296
Raytheon Company Common
Stock Fund* 799,542,751
BT Pyramid Equity
Index Fund* 745,602,791
Fidelity Balanced Fund* 442,796,289
Fidelity Magellan Fund* 379,680,454
Fidelity Blue Chip Fund* 391,787,509
Templeton Foreign I Fund 6,966,704
Fidelity Investment Grade
Bond Fund -
Fidelity Retirement
Money Market 13,202,524
Vanguard Winsor 41
Vanguard Wellesley 18
TRP Small Cap Stock $ 348 348
Raytheon Class A Wasting
Stock Fund $ 116,129,149 116,129,149
Raytheon GMH Wasting
Stock Fund $ 172,859,819 172,859,819
Loans receivable from
participants $ 250,687,865 250,687,865
-------------- -------------- -------------- -------------- ------------- --------------
Total investments 348 116,129,149 172,859,819 250,687,865 - 6,128,177,888
-------------- -------------- -------------- -------------- ------------- --------------
Receivables:
Employer contribution 3,595,261
Accrued investment income
and other receivables 1,193,397 23,640 7,539,589
Transfer receivables 120,761,325 178,295,618 117,046,618 $ 855,826,675 4,035,178,551
Cash and cash equivalents 3,480,490 5,474,220 147,258,083
-------------- -------------- -------------- ------------- -------------- --------------
Total assets 348 241,564,361 356,653,297 367,734,483 855,826,675 10,321,749,372
-------------- -------------- -------------- ------------- -------------- --------------
Liabilities:
Payable for outstanding
purchases 1,932,125
Accrued expenses and
other payables 41,711 62,061 2,802,367
Transfer payables 120,761,325 178,295,618 117,046,618 3,179,351,876
-------------- -------------- -------------- ------------- -------------- --------------
Total liabilities - 120,803,036 178,357,679 117,046,618 - 3,184,086,368
-------------- -------------- -------------- ------------- -------------- --------------
Net assets available for
plan benefits $ 348 $120,761,325 $ 178,295,618 $ 250,687,865 $ 855,826,675 $7,137,663,004
============== ============== ============== ============== ============== ==============
Percentage of Master Trust that are Plan assets - 0.00%
*Represent more than 5% of net assets available for plan benefits
(1) Other represents Raytheon plans merging in from outside the Master Trust.
Note: Not all funds within the Master Trust are available options to
participants in the Plan.
</TABLE>
<PAGE>
19
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, 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:
Investments:
At contract value:
Bankers Trust* $351,035,073
Prudential Life 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 Fund* $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
============ ============ ============ ============ ============ ===========
<PAGE>
20
Templeton Investment Retirement
Blue Chip Foreign I Grade Money Loan
Fund Fund Bond Fund Market Fund Fund Total
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $351,035,073
Prudential Life 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 Fund* 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 - 5.1%
*Represent more than 5% of net assets available for plan benefits
Note: Not all funds within the Master Trust are available options to
participants in the Plan.
</TABLE>
<PAGE>
21
J. Master Trust, Continued:
The following is a summary of investment income by fund under the Master Trust
for the year ended December 31, 1998:
<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>
Investment income:
Net appreciation
(depreciation) of assets $ 30,695 $ 49,019,748 $74,202,083 $149,571,006 $16,091,158 $62,195,801
Interest & Dividends 81,886,632 86,279,682 1,792 42,537,357 13,255,763
----------- ------------ ----------- ------------ ----------- -----------
Total investment
income/(loss) $81,917,327 $135,299,430 $74,203,875 $149,571,006 $58,628,515 $75,451,564
=========== ============ =========== ============ =========== ===========
<PAGE>
22
Templeton Investment Retirement Vanguard Vanguard
Blue Chip Foreign I Grade Money Winsor Wellesley
Fund Fund Bond Fund Market Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Net appreciation
(depreciation) of assets $60,264,181 $(1,095,980) $ 17,635 $2,864,378 $1,379,950
Interest & Dividends 13,550,491 752,610 162,858 $ 349,740
----------- ----------- -------- ---------- ---------- ----------
Total investment
income/(loss) $73,814,672 $ (343,370) $180,493 $ 349,740 $2,864,378 $1,379,950
=========== =========== ======== ========== ========== ==========
<PAGE>
23
TRP Small RTN.A GMH
Cap Stock Wasting Wasting Loan
Fund Fund Fund Fund Total
<S> <C> <C> <C> <C> <C>
Investment income:
Net appreciation
(depreciation) of assets $ 15 $ (35,268) $44,604,025 $459,109,427
Interest & Dividends $15,334,403 254,111,328
----------- ---------- ----------- ----------- ------------
Total investment
income/(loss) $ 15 $ (35,268) $44,604,025 $15,334,403 $713,220,755
=========== ========== =========== =========== ============
</TABLE>
<PAGE>
1
EXHIBIT 99.2a
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (File No. 333-56117) of Raytheon Company of our report
dated June 4, 1999 relating to the financial statements of the Raytheon Savings
and Investment Plan for Specified Hourly Payroll Employees, which appears in
this Form 10-K/A.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 29, 1999
<PAGE>
1
EXHIBIT 99.3
RAYTHEON EMPLOYEE SAVINGS
AND INVESTMENT PLAN
FINANCIAL STATEMENTS
TO ACCOMPANY 1998 FORM 5500
ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN
UNDER ERISA OF 1974
FOR THE YEAR ENDED DECEMBER 31, 1998
The supplemental schedules to the Plan's Form 5500 are not required since the
Plan's assets are held in a Master Trust. Accordingly, the Plan administrator
must file detailed financial information, including the supplemental schedules,
separately with the Department of Labor.
<PAGE>
2
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of
the Raytheon Employee Savings and Investment Plan:
In our opinion, the accompanying statements of net assets available for plan
benefits and the related statement of changes in net assets available for plan
benefits present fairly, in all material respects, the net assets available for
benefits of the Raytheon Employee Savings and Investment Plan (the "Plan") at
December 31, 1998 and 1997, and the changes in net assets available for benefits
for the year ended December 31, 1998 in conformity with generally accepted
accounting principles. 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 of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 4, 1999
<PAGE>
3
RAYTHEON EMPLOYEE SAVINGS AND INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
as of December 31, 1998 and 1997
1998 1997
Assets:
Master trust investments:
At contract value (Notes B, E and I) $ 21,118,702 $ 20,126,493
At fair value (Notes B, F and I) 57,350,890 41,496,932
------------ ------------
78,469,592 61,623,425
------------ ------------
Receivables:
Accrued investment income
and other receivables 75,163 79,759
Transfer receivables (Note H) 210,313,280 -
Cash and cash equivalents 2,117,237 422,687
------------ ------------
Total assets 290,975,272 62,125,871
------------ ------------
Liabilities:
Payable for outstanding purchases 21,566 72,220
Accrued expenses and other payables 32,586 34,682
------------ ------------
Total liabilities 54,152 106,902
------------ ------------
Net assets available for plan benefits $290,921,120 $ 62,018,969
============ ============
The accompanying notes are an integral part of the financial statements.
<PAGE>
4
RAYTHEON EMPLOYEE SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1998
Additions to net assets attributable to:
Investment income (Notes B, E and I):
Net appreciation of investments $ 7,179,846
Interest & Dividends 3,401,424
------------
10,581,270
Contributions and deferrals:
Employee deferrals 10,671,948
Employer contributions 5,466,458
Transfers (Note G and H) 211,989,472
------------
228,127,878
Total additions 238,709,148
------------
Deductions from net assets attributable to:
Distributions to participants 9,761,895
Administrative expenses 5,356
Transfers (Note G) 39,746
------------
Total deductions 9,806,997
Increase in net assets 228,902,151
Net assets, beginning of year 62,018,969
------------
Net assets, end of year $290,921,120
============
The accompanying notes are an integral part of the financial statements.
<PAGE>
5
RAYTHEON EMPLOYEE SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
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. As more fully
described in Note H, effective January 1, 1999, the participants and related
account balances of several defined contribution plans (collectively referred to
as "Prior Plans") were merged into the Plan.
The Plan is a defined contribution plan and covers the employees of the Raytheon
Support Services Company and the Range Systems Engineer Support Company,
respectively, 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. Effective January 1,
1999, certain union employees of Raytheon Systems Company, Cedarapids, Inc. and
Raytheon Aircraft Company who participated in Prior Plans were merged into the
Plan and all eligible employees, including those from Prior Plans, may join the
Plan immediately. In addition, the Raytheon Stock Ownership Plan for Specified
Hourly Payroll Employees (referred to as the "Prior ESOP Plan") was merged into
the Plan and created an additional employee stock ownership portion (ESOP) of
the Plan.
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 the Internal Revenue Code
(the "Code"). The ESOP is intended to be an employee stock ownership arrangement
in compliance with all of the related requirements for a qualified stock bonus
plan as defined in the Code. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA).
The Plan's investments are combined with the investments of other similar
defined contribution plans of Raytheon Company and subsidiaries into the
Raytheon Company Master Trust for Defined Contribution Plans ("Master Trust").
The trustee of the Master Trust maintains a separate account reflecting the
equitable share in the Master 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 non-elective contributions (QNECs)
to certain accounts based on specific employee agreements. For 1998, the annual
employee deferral for a participant cannot exceed $10,000. Rollover
contributions from other qualified plans are accepted by the Plan.
<PAGE>
6
Effective January 1, 1999, eligible employees at certain divisions of Raytheon
Systems Company have different deferral limitations ranging from 10% to 20%,
depending upon division. In addition, for certain union employees at Raytheon
Systems Company, Cedarapids, Inc. and Raytheon Aircraft Company, the Company
will match amounts at 100%, 50% of the first 6% or 50% of the first 3% of
elective deferrals. The maximum match varies by division and is 4%, 3% or 1.5%
of compensation. The Company match is participant directed at certain divisions.
At divisions where the Company match is not participant directed, the match
shall be made to the Raytheon Common Stock Fund and must be held in that fund
until the beginning of the fifth Plan Year following the Plan Year for which the
contribution was made. For certain divisions, the Company will also make QNECs,
employer contributions based on hours of service or percent of pay and/or ESOP
contributions. When applicable, ESOP contributions are equal to one-half of one
percent of the participant's compensation. The ESOP portion of the Plan provides
for investment, primarily in Raytheon Company Class B common stock; however, as
required by the Code, the Plan permits limited diversification after a
participant attains age 55 or completes 10 years of plan participation
(including participation in the Prior ESOP 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) the Fidelity Equity Income Fund which invests in
shares of a mutual fund consisting primarily of income-producing equity
securities, (c) a Raytheon Common Stock Fund which invests in shares of Raytheon
Company 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) the Fidelity Balanced Fund which invests in shares of a mutual fund
consisting primarily of equity securities, bonds and money market instruments,
(f) the Fidelity Magellan Fund, a growth fund which invests primarily in
equities of companies of all types and sizes, and (g) the Fidelity Blue Chip
Fund, a growth fund which invests primarily in equities of well known and
established companies. Dividends and distributions from all fund options are
reinvested in their respective funds; stock dividends, stock splits and similar
changes are also reflected in the funds.
Effective January 1, 1999, the Plan will offer several additional fund options
that were available in prior plans. These options include:
Templeton Foreign I Fund - a long-term capital growth fund which invests in
stocks and debt obligations of companies and governments of any nation.
Vanguard Morgan Growth Fund - investments consist primarily of common stocks of
corporations with either established growth patterns, emerging growth potential,
or cyclical growth patterns.
<PAGE>
7
Vanguard Windsor Fund - investments consist of a portfolio of common stocks, the
objective of which is primarily long-term growth and secondarily, current income
through dividends.
Vanguard Wellesley Income Fund - investments consist of about 60% fixed-income
securities and 40% common stocks. The Fund objective is primarily current income
through dividends, and secondarily, moderate capital growth.
T. Rowe Price Small Cap Stock Fund - invests in equity securities of small, high
growth potential companies.
RTN-A Wasting Fund and GMH Wasting Fund - hold shares of Raytheon Company Class
A common stock or General Motors Class H common stock, respectively, that were
transferred into the Plan from Prior Plans. These options will not be open for
additional contributions and will only be available through December 31, 2002.
Participant Accounts
Each participant's account is credited with the participant's deferral, any
applicable employer contributions (QNECs, matching contributions, employer or
ESOP) 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.
Certain union employees at Raytheon Systems Company, Cedarapids, Inc. and
Raytheon Aircraft Company, whose accounts merged into the Plan effective January
1, 1999, will retain the vesting schedule from their Prior Plans. Vesting
requirements for employer contributions plus earnings thereon may vary depending
upon when an employee became eligible to participate in the Prior Plans. Vesting
generally occurs upon completion of five years of service or upon three years of
Plan participation or upon retirement, death, disability, or attainment of
normal retirement age. Forfeitures of the non-vested 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
($5,000 effective January 1, 1999) 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.
<PAGE>
8
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 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
The Plan participants pay substantially all expenses of administering the Plan.
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. Contract value approximates 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 ecurities 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.
Participant loans are valued at cost, which approximates fair value.
Security transactions are recorded on the 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. Investment income
includes both dividend and interest income.
Benefits are recorded when paid.
Certain items in the 1997 financial statements have been reclassified to conform
to the 1998 presentation.
<PAGE>
9
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 Internal Revenue Service has determined and informed the Company by letter
dated June 1995 that the Plan and related trust are designed in accordance with
applicable sections of the 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 applicable requirements of the 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 which are
managed by insurance companies and investment management firms. 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>
10
Annualized Credited
Average Yield Interest Rate
For the year ended December 31, 1998:
Banker's Trust (WBS 92-485) 6.85% 6.85%
Metropolitan Life Insurance
Company (GIC GA-12908) 6.58% 6.58%
Metropolitan Life Insurance
Company (GIC GA-13659) 6.10% 6.10%
Prudential Asset Management
Company (GIC 917163-001) 6.75% 6.75%
Connecticut General (GIC 0025174) 5.58% 5.58%
Fidelity IPL (633-GCDC) 5.62% 5.62%
Monumental Life Insurance
Company (GIC BDA00463FR-00) 7.84% 7.84%
For the year ended December 31, 1997:
Banker's 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:
The Plan's trustee is Fidelity Management Trust Company (the "Trustee"). The
Trustee holds the funds for the Plan and is responsible for managing the Plan's
investment assets, executing all investment transactions, recording approved
transactions, and, therefore these transactions qualify as party-in-interest.
In accordance with the provisions of the Plan, the Trustee acts as the Plan's
agent for purchases and sales of shares of Raytheon Company common stock. These
transactions are performed on a Master Trust level. For the Master Trust,
purchases amounted to $288,116,995 and sales amounted to $257,878,566 for the
year ended December 31, 1998.
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>
11
H. Transfer Receivables:
As part of an overall effort to minimize plan design differences and increase
administrative efficiencies, the Board of Directors of Raytheon Company voted on
December 16, 1998 to merge the participants and their account balances from
several Prior Plans into the Plan. The Prior Plans ceased to exist on December
31, 1998 and effective January 1, 1999, the provisions of the Plan govern. The
transfer receivable by Prior Plan is as follows:
Raytheon Savings and Investment Plan
for Specified Hourly Payroll Employees $109,994,457
Raytheon Tucson Bargaining Unit Employees
Savings and Investment Plan 46,783,076
Raytheon Savings and Investment Plan (10014) 18,676,997
Serv-Air, Inc. Savings and Retirement Plan 18,053,874
Raytheon Stock Ownership Plan for Specified
Hourly Payroll Employees 16,804,876
------------
Total $210,313,280
============
<PAGE>
12
I. Fund Data:
The following is a summary of net assets available for plan benefits by
fund as of December 31, 1998:
<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:
Master trust investments:
At contract value:
Bankers Trust $ 7,434,772
Prudential Life Insurance
Company of America 3,723,037
Metropolitan Life
Insurance Company 9,344,894
Fidelity 405,365
Connecticut General 102,718
Monumental Life
Insurance Company 107,916
At fair value:
Fidelity Equity
Income Fund $10,975,776
Raytheon Company
Common Stock Fund $8,925,215
BT Pyramid Equity
Index Fund $10,496,295
Fidelity Balanced
Fund $4,014,520
Fidelity Magellan
Fund $7,549,319
Fidelity Blue
Chip Fund $9,160,057
Fund
Loans receivable
from participants
------------ ----------- ----------- ----------- ---------- ----------- -----------
Total investments 21,118,702 10,975,776 8,925,215 10,496,295 4,014,520 7,549,319 9,160,057
------------ ----------- ----------- ----------- ---------- ----------- -----------
Receivables:
Accrued investment income
and other receivables 53,010 22,153
Cash and cash equivalents 1,947,524 122,833 46,880
----------- ----------- ----------- ----------- ---------- ---------- ----------
Total assets 23,066,226 10,975,776 9,101,058 10,565,328 4,014,520 7,549,319 9,160,057
------------ ----------- ----------- ----------- ---------- ---------- ----------
Liabilities:
Payable for outstanding
purchases 21,566
Accrued expenses and other
payables 20,691 11,895
------------ ----------- ----------- ----------- ---------- ---------- ----------
Total liabilities - - 42,257 11,895 - - -
------------ ----------- ----------- ----------- ---------- ---------- ----------
Net assets available for
plan benefits $ 23,066,226 $10,975,776 $9,058,801 $10,553,433 $4,014,520 $7,549,319 $9,160,057
============ =========== ========== =========== ========== ========== ==========
<PAGE>
13
Loan
Fund Other(1) Total
<S> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust $ 7,434,772
Prudential Insurance
Company of America 3,723,037
Metropolitan Life
Insurance Company 9,344,894
Fidelity 405,365
Connecticut General 102,718
Monumental Life
Insurance Company 107,916
At fair value:
Fidelity Equity
Income Fund 10,975,776
Raytheon Company
Common Stock Fund 8,925,215
BT Pyramid Equity
Index Fund 10,496,295
Fidelity Balanced
Fund 4,014,520
Fidelity Magellan
Fund 7,549,319
Fidelity Blue
Chip Fund 9,160,057
Loans receivable
from participants $ 6,229,708 6,229,708
----------- ------------ ------------
Total investments 6,229,708 - 78,469,592
----------- ------------ ------------
Receivables:
Accrued investment income
and other receivables 75,163
Transfer Receivables $210,313,280 210,313,280
Cash and cash equivalents 2,117,237
----------- ------------ ------------
Total assets 6,229,708 210,313,280 290,975,272
----------- ------------ ------------
Liabilities:
Payable for outstanding
purchases 21,566
Accrued expenses and
other payables 32,586
----------- ------------ ------------
Total liabilities - - 54,152
----------- ------------ ------------
Net assets available for
plan benefits $ 6,229,708 $210,313,280 $290,921,120
=========== ============ ============
(1) See Note H.
</TABLE>
<PAGE>
14
<TABLE>
<CAPTION>
I. Fund Data, Continued:
The following is a summary of net assets available for plan benefits by
fund as of December 31, 1997:
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>
15
Blue Chip Loan
Fund 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>
16
<TABLE>
<CAPTION>
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, 1998:
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>
Additions to net assets
attributable to:
Investment income:
Net appreciation of
investments $ 783 $ 549,040 $ 995,655 $ 2,336,298 $ 267,944 $ 1,350,108 $ 1,680,018
Interest & Dividends 1,380,765 623,016 376,854 321,620 339,826
----------- ------------ ----------- ----------- ----------- ------------ ------------
1,381,548 1,172,056 995,655 2,336,298 644,798 1,671,728 2,019,844
----------- ------------ ----------- ----------- ----------- ------------ ------------
Contributions and deferrals:
Employee deferrals 1,717,217 1,720,660 1,619,094 1,708,027 627,263 1,570,913 1,708,774
Employer contributions 3,341,633 380,809 500,677 376,096 138,312 347,345 381,586
Transfers 329,389 23,545 203,917 173,239 986 25,517 47,976
------------ ------------ ----------- ----------- ----------- ------------ ------------
5,388,239 2,125,014 2,323,688 2,257,362 766,561 1,943,775 2,138,336
------------ ------------ ----------- ----------- ----------- ------------ ------------
Total additions 6,769,787 3,297,070 3,319,343 4,593,660 1,411,359 3,615,503 4,158,180
------------ ------------ ----------- ----------- ----------- ------------ ------------
Deductions from net assets
attributable to:
Distributions to
participants 4,202,881 1,133,189 838,121 991,231 388,044 583,103 780,586
Administrative expenses 1,796 884 811 708 278 401 478
Transfers 6,061 21,342 12,343
------------ ------------ ----------- ----------- ----------- ------------ ------------
Total deductions 4,204,677 1,140,134 838,932 991,939 409,664 595,847 781,064
------------ ------------ ----------- ----------- ----------- ------------ ------------
Interfund transfers 176,339 (923,858) (2,044,621) (332,231) 89,081 618,804 1,183,529
------------ ------------ ----------- ----------- ----------- ----------- ------------
Increase in net assets 2,741,449 1,233,078 435,790 3,269,490 1,090,776 3,638,460 4,560,645
------------ ------------ ----------- ----------- ------------ ------------ ------------
Net assets, beginning
of year 20,324,777 9,742,698 8,623,011 7,283,943 2,923,744 3,910,859 4,599,412
------------ ------------ ----------- ----------- ------------ ------------ ------------
Net assets, end of year $ 23,066,226 $ 10,975,776 $ 9,058,801 $10,553,433 $ 4,014,520 $ 7,549,319 $ 9,160,057
============ ============ =========== =========== ============ ============ ============
<PAGE>
17
Loan
Fund Other Total
<S> <C> <C> <C>
Additions to net assets
attributable to:
Investment income:
Net appreciation of
investments $ 7,179,846
Interest & Dividends $ 359,343 3,401,424
----------- ------------- -------------
359,343 - 10,581,270
------------ ------------- -------------
Contributions and deferrals:
Employee deferrals 10,671,948
Employer contributions 5,466,458
Transfers 871,623 $210,313,280 211,989,472
------------ ------------- -------------
871,623 210,313,280 228,127,878
------------ ------------- -------------
Total additions 1,230,966 210,313,280 238,709,148
------------ ------------- -------------
Deductions from net assets
attributable to:
Distributions to
participants 844,740 9,761,895
Administrative expenses 5,356
Transfers 39,746
------------ -------------- -------------
Total deductions 844,740 - 9,806,997
------------ -------------- -------------
Interfund transfers 1,232,957
----------- -------------- -------------
Increase in net assets 1,619,183 210,313,280 228,902,151
----------- -------------- -------------
Net assets, beginning
of year 4,610,525 - 62,018,969
----------- -------------- -------------
Net assets, end of year $ 6,229,708 $ 210,313,280 $ 290,921,120
=========== ============== =============
</TABLE>
<PAGE>
18
J. Master Trust:
All plan investments are included under the Master Trust. At December 31,
1998, assets of the Plan represented 4.08% of the total assets under the Master
Trust. This has decreased from 1.8% at December 31, 1997.
The following is a summary of net assets available for plan benefits by
fund under the Master Trust as of December 31, 1998:
<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* $ 473,258,791
Prudential Life Insurance
Company of America 236,989,116
Metropolitan Life
Insurance Company* 594,847,154
Fidelity 25,803,449
Connecticut General 6,538,482
Monumental Life Insurance
Company 6,869,338
At fair value:
Fidelity Equity Income
Fund* $1,464,615,296
Raytheon Company Common
Stock Fund* $ 799,542,751
BT Pyramid Equity
Index Fund* $ 745,602,791
Fidelity Balanced Fund* $ 442,796,289
Fidelity Magellan Fund* $ 379,680,454
Fidelity Blue Chip Fund*
Templeton Foreign I Fund
Fidelity Investment Grade
Bond Fund
Fidelity Retirement
Money Market
Vanguard Winsor
Vanguard Wellesley
TRP Small Cap Stock
Raytheon Class A Wasting
Stock Fund
Raytheon GMH Wasting
Stock Fund
Loans receivable from
participants
-------------- -------------- -------------- -------------- -------------- --------------
Total investments 1,344,306,330 1,464,615,296 799,542,751 745,602,791 442,796,289 379,680,454
-------------- -------------- -------------- -------------- -------------- --------------
Receivables:
Employer contribution
Accrued investment income
and other receivables 4,748,948 1,573,604
Transfer receivables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803
Cash and cash equivalents 123,969,201 11,004,025 3,330,147
-------------- -------------- -------------- -------------- -------------- --------------
Total assets 2,048,537,201 2,226,757,712 1,255,380,751 967,248,229 755,173,618 616,369,257
-------------- -------------- -------------- -------------- -------------- --------------
Liabilities:
Payable for outstanding
purchases 1,932,125
Accrued expenses and
other payables 1,853,618 844,977
Transfer payables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803
-------------- -------------- -------------- -------------- -------------- --------------
Total liabilities 580,261,670 762,142,416 443,870,770 217,586,664 312,377,329 236,688,803
-------------- -------------- -------------- -------------- -------------- --------------
Net assets available for
plan benefits $1,468,275,531 $1,464,615,296 $ 811,509,981 $ 749,661,565 $ 442,796,289 $ 379,680,454
============== ============== ============== ============== ============== ==============
<PAGE>
19
Templeton Investment Retirement Vanguard Vanguard
Blue Chip Foreign I Grade Money Winsor Wellesley
Fund Fund Bond Fund Market Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust*
Prudential Life Insurance
Company of America
Metropolitan Life
Insurance Company*
Fidelity
Connecticut General
Monumental Life Insurance
Company
At fair value:
Fidelity Equity Income
Fund*
Raytheon Company Common
Stock Fund*
BT Pyramid Equity
Index Fund*
Fidelity Balanced Fund*
Fidelity Magellan Fund*
Fidelity Blue Chip Fund* $ 391,787,509
Templeton Foreign I Fund $ 6,966,704
Fidelity Investment Grade
Bond Fund $ -
Fidelity Retirement
Money Market $ 13,202,524
Vanguard Winsor $ 41
Vanguard Wellesley $ 18
TRP Small Cap Stock
Raytheon Class A Wasting
Stock Fund
Raytheon GMH Wasting
Stock Fund
Loans receivable from
participants
-------------- -------------- -------------- ------------- ------------- --------------
Total investments 391,787,509 6,966,704 - 13,202,524 41 18
-------------- -------------- -------------- ------------- ------------- --------------
Receivables:
Employer contribution 3,595,261
Accrued investment income
and other receivables
Transfer receivables 191,269,141 6,966,652 16,715,590
Cash and cash equivalents
-------------- -------------- -------------- ------------- ------------- --------------
Total assets 583,056,650 13,933,356 - 33,513,375 41 18
-------------- -------------- -------------- ------------- ------------- --------------
Liabilities:
Payable for outstanding
purchases
Accrued expenses and
other payables
Transfer payables 191,269,141 6,966,652 16,715,590
-------------- -------------- -------------- ------------- ------------- --------------
Total liabilities 191,269,141 6,966,652 - 16,715,590 - -
-------------- -------------- -------------- ------------- ------------- --------------
Net assets available for
plan benefits $ 391,787,509 $ 6,966,704 $ - $ 16,797,785 $ 41 $ 18
============== ============== ============== ============== ============== ==============
<PAGE>
20
TRP Small RTN.A GMH
Cap Stock Wasting Wasting Loan
Fund Fund Fund Fund Other(1) Total
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $ 473,258,791
Prudential Life Insurance
Company of America 236,989,116
Metropolitan Life
Insurance Company* 594,847,154
Fidelity 25,803,449
Connecticut General 6,538,482
Monumental Life Insurance
Company 6,869,338
At fair value:
Fidelity Equity Income
Fund* 1,464,615,296
Raytheon Company Common
Stock Fund* 799,542,751
BT Pyramid Equity
Index Fund* 745,602,791
Fidelity Balanced Fund* 442,796,289
Fidelity Magellan Fund* 379,680,454
Fidelity Blue Chip Fund* 391,787,509
Templeton Foreign I Fund 6,966,704
Fidelity Investment Grade
Bond Fund -
Fidelity Retirement
Money Market 13,202,524
Vanguard Winsor 41
Vanguard Wellesley 18
TRP Small Cap Stock $ 348 348
Raytheon Class A Wasting
Stock Fund $ 116,129,149 116,129,149
Raytheon GMH Wasting
Stock Fund $ 172,859,819 172,859,819
Loans receivable from
participants $ 250,687,865 250,687,865
-------------- -------------- -------------- -------------- ------------- --------------
Total investments 348 116,129,149 172,859,819 250,687,865 - 6,128,177,888
-------------- -------------- -------------- -------------- ------------- --------------
Receivables:
Employer contribution 3,595,261
Accrued investment income
and other receivables 1,193,397 23,640 7,539,589
Transfer receivables 120,761,325 178,295,618 117,046,618 $ 855,826,675 4,035,178,551
Cash and cash equivalents 3,480,490 5,474,220 147,258,083
-------------- -------------- -------------- ------------- -------------- --------------
Total assets 348 241,564,361 356,653,297 367,734,483 855,826,675 10,321,749,372
-------------- -------------- -------------- ------------- -------------- --------------
Liabilities:
Payable for outstanding
purchases 1,932,125
Accrued expenses and
other payables 41,711 62,061 2,802,367
Transfer payables 120,761,325 178,295,618 117,046,618 3,179,351,876
-------------- -------------- -------------- ------------- -------------- --------------
Total liabilities - 120,803,036 178,357,679 117,046,618 - 3,184,086,368
-------------- -------------- -------------- ------------- -------------- --------------
Net assets available for
plan benefits $ 348 $120,761,325 $ 178,295,618 $ 250,687,865 $ 855,826,675 $7,137,663,004
============== ============== ============== ============== ============== ==============
Percentage of Master Trust that are Plan assets - 4.08%
*Represent more than 5% of net assets available for plan benefits
(1) Other represents Raytheon plans merging in from outside the Master Trust.
Note: Not all funds within the Master Trust are available options to
participants in the Plan.
</TABLE>
<PAGE>
21
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, 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:
Investments:
At contract value:
Bankers Trust* $351,035,073
Prudential Life 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 Fund* $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
============ ============ ============ ============ ============ ===========
<PAGE>
22
Templeton Investment Retirement
Blue Chip Foreign I Grade Money Loan
Fund Fund Bond Fund Market Fund Fund Total
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $351,035,073
Prudential Life 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 Fund* 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 - 1.76%
*Represent more than 5% of net assets available for plan benefits
Note: Not all funds within the Master Trust are available options to
participants in the Plan.
</TABLE>
<PAGE>
23
J. Master Trust, Continued:
The following is a summary of investment income by fund under the Master Trust
for the year ended December 31, 1998:
<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>
Investment income:
Net appreciation
(depreciation) of assets $ 30,695 $ 49,019,748 $74,202,083 $149,571,006 $16,091,158 $62,195,801
Interest & Dividends 81,886,632 86,279,682 1,792 42,537,357 13,255,763
----------- ------------ ----------- ------------ ----------- -----------
Total investment
income/(loss) $81,917,327 $135,299,430 $74,203,875 $149,571,006 $58,628,515 $75,451,564
=========== ============ =========== ============ =========== ===========
<PAGE>
24
Templeton Investment Retirement Vanguard Vanguard
Blue Chip Foreign I Grade Money Winsor Wellesley
Fund Fund Bond Fund Market Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Net appreciation
(depreciation) of assets $60,264,181 $(1,095,980) $ 17,635 $2,864,378 $1,379,950
Interest & Dividends 13,550,491 752,610 162,858 $ 349,740
----------- ----------- -------- ---------- ---------- ----------
Total investment
income/(loss) $73,814,672 $ (343,370) $180,493 $ 349,740 $2,864,378 $1,379,950
=========== =========== ======== ========== ========== ==========
<PAGE>
25
TRP Small RTN.A GMH
Cap Stock Wasting Wasting Loan
Fund Fund Fund Fund Total
<S> <C> <C> <C> <C> <C>
Investment income:
Net appreciation
(depreciation) of assets $ 15 $ (35,268) $44,604,025 $459,109,427
Interest & Dividends $15,334,403 254,111,328
----------- ---------- ----------- ----------- ------------
Total investment
income/(loss) $ 15 $ (35,268) $44,604,025 $15,334,403 $713,220,755
=========== ========== =========== =========== ============
</TABLE>
<PAGE>
1
EXHIBIT 99.3a
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (File No. 333-56117) of Raytheon Company of our report
dated June 4, 1999 relating to the financial statements of the Raytheon Employee
Savings and Investment Plan, which appears in this Form 10-K/A.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 29, 1999
<PAGE>
1
EXHIBIT 99.4
RAYTHEON SAVINGS AND INVESTMENT PLAN
FOR PUERTO RICO BASED EMPLOYEES
FINANCIAL STATEMENTS
TO ACCOMPANY 1998 FORM 5500
ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN
UNDER ERISA OF 1974
for the Year ended December 31, 1998
The supplemental schedules to the Plan's Form 5500 are not required since the
Plan's assets are held in a Master Trust. Accordingly, the Plan administrator
must file detailed financial information, including the supplemental schedules,
separately with the Department of Labor.
<PAGE>
2
Report of Independent Accountants
To the Participants and Administrator of
the Raytheon Savings and Investment Plan for Puerto Rico Based Employees
In our opinion, the accompanying statements of net assets available for plan
benefits and the related statement of changes in net assets available for plan
benefits present fairly, in all material respects, the net assets available for
benefits of the Raytheon Savings and Investment Plan for Puerto Rico Based
Employees (the "Plan") at December 31, 1998 and 1997, and the changes in net
assets available for benefits for the year ended December 31, 1998 in conformity
with generally accepted accounting principles. 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 of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 4, 1999
<PAGE>
3
RAYTHEON SAVINGS AND INVESTMENT PLAN FOR PUERTO RICO BASED EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
as of December 31, 1998 and 1997
1998 1997
Assets:
Master trust investments:
At contract value (Notes B, E and H) $ 89,386 $ 77,879
At fair value (Notes B, F and H) 1,175,199 700,111
----------- ----------
1,264,585 777,990
----------- ----------
Receivables:
Accrued investment income and
other receivables 2,417 1,775
Cash and cash equivalents 13,742 5,598
----------- ----------
Total assets 1,280,744 785,363
----------- ----------
Liabilities:
Payable for outstanding purchases 776 1,723
Accrued expenses and other payables 1,019 696
----------- ----------
Total liabilities 1,795 2,419
----------- ----------
Net assets available for plan benefits $ 1,278,949 $ 782,944
=========== ==========
The accompanying notes are an integral part of the financial statements.
<PAGE>
4
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, 1998
Additions to net assets attributable to:
Investment income (Notes B, E and H):
Net appreciation of investments $ 209,437
Interest & Dividends 34,823
----------
244,260
Contributions and deferrals:
Employee deferrals 239,993
Employer contributions 87,083
Transfers (Note G) 55,305
----------
382,381
----------
Total additions 626,641
----------
Deductions from net assets attributable to:
Distributions to participants 100,711
Administrative expenses 68
Transfers (Note G) 29,857
----------
Total deductions 130,636
----------
Increase in net assets 496,005
Net assets, beginning of year 782,944
----------
Net assets, end of year $1,278,949
==========
The accompanying notes are an integral part of the financial statements.
<PAGE>
5
RAYTHEON SAVINGS AND INVESTMENT PLAN
FOR PUERTO RICO BASED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
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 combined with the investments of other similar
defined contribution plans of Raytheon Company into the Raytheon Company Master
Trust for Defined Contribution Plans ("Master Trust"). 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. For 1998, the annual employee
deferral for a participant cannot exceed the lesser of $8,000 or 10% of a
participant's annual compensation, minus any contributions to Puerto Rico
qualified Individual Retirement Accounts. 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) the
Fidelity Equity Income Fund which invests in shares of a mutual fund consisting
primarily of income-producing equity securities, (c) a Raytheon Common Stock
Fund which invests in shares of Raytheon Company 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) the Fidelity Balanced
Fund which invests in shares of a mutual fund consisting primarily of equity
securities, bonds and money market instruments, (f) the Fidelity Magellan Fund,
a growth fund which invests primarily in equities of companies of all types and
sizes, and (g) the Fidelity Blue Chip Fund, a growth fund which invests
primarily in equities of well known and established companies. Dividends and
distributions from investments of the Fidelity Equity Income Fund, the Raytheon
Common Stock Fund, the Stock Index Fund, the Fidelity Balanced Fund, the
Fidelity Magellan Fund and the Fidelity Blue Chip Fund are reinvested in their
respective funds; stock dividends, stock splits and similar changes are also
reflected in the funds.
<PAGE>
6
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 completion of five years of service
or after 3 years of 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
part of deferrals. On termination of employment, a participant will receive a
lump-sum distribution. If the vested account is valued in excess of $3,500, the
participant has the option 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
Certain expenses of administering the Plan are paid by the plan participants.
<PAGE>
7
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. Contract value approximates 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. Participant loans are valued at cost, which approximates fair value.
Security transactions are recorded on the 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. Investment income
includes both dividend and interest income.
Benefits are recorded when paid.
Certain items in the 1997 financial statements have been reclassified to
conform to the 1998 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.
<PAGE>
8
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. 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 which are
managed by insurance companies and investment management firms. 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>
9
Annualized Credited
Average Yield Interest Rate
For the year ended December 31, 1998:
Banker's Trust (WBS 92-485) 6.85% 6.85%
Metropolitan Life Insurance
Company (GIC GA-12908) 6.58% 6.58%
Metropolitan Life Insurance
Company (GIC GA-13659) 6.10% 6.10%
Prudential Asset Management
Company (GIC 917163-001) 6.75% 6.75%
Connecticut General (GIC 0025174) 5.58% 5.58%
Fidelity IPL (633-GCDC) 5.62% 5.62%
Monumental Life Insurance
Company (GIC BDA00463FR-00) 7.84% 7.84%
For the year ended December 31, 1997:
Banker's 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:
The Plan's trustee is Fidelity Management Trust Company (the "Trustee"). The
Trustee holds the funds for the Plan and is responsible for managing the Plan's
investment assets, executing all investment transactions, recording approved
transactions, and, therefore these transactions qualify as party-in-interest.
In accordance with the provisions of the Plan, the "Trustee" acts as the Plan's
agent for purchases and sales of shares of Raytheon Company common stock. These
transactions are performed on a Master Trust level. For the Master Trust,
purchases amounted to $288,116,995 and sales amounted to $257,878,566 for the
year ended December 31, 1998.
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>
10
H. Fund Data:
The following is a summary of net assets available for plan benefits by
fund as of December 31, 1998:
<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:
Master trust investments:
At contract value:
Bankers Trust $ 31,468
Prudential Insurance
Company of America 15,758
Metropolitan Life
Insurance Company 39,552
Fidelity 1,716
Connecticut General 435
Monumental Life
Insurance Company 457
At fair value:
Fidelity Equity
Income Fund* $ 287,340
Raytheon Company
Common Stock Fund* $ 321,152
BT Pyramid Equity
Index Fund* $ 241,676
Fidelity Balanced
Fund $ 61,028
Fidelity Magellan
Fund* $ 117,182
Fidelity Blue
Chip Fund* $ 109,521
Loans receivable
from participants
------------ ----------- ----------- ----------- ---------- ----------- -----------
Total investments 89,386 287,340 321,152 241,676 61,028 117,182 109,521
------------ ----------- ----------- ----------- ---------- ----------- -----------
Receivables:
Accrued investment income
and other receivables 1,907 510
Cash and cash equivalents 8,243 4,420 1,079
------------ ----------- ----------- ----------- ----------- ------------ -----------
Total assets 97,629 287,340 327,479 243,265 61,028 117,182 109,521
------------ ----------- ----------- ----------- ----------- ------------ -----------
Liabilities:
Payable for outstanding
purchases 776
Accrued expenses and other
payables 745 274
------------ ----------- ----------- ----------- ---------- ----------- -----------
Total liabilities - - 1,521 274 - - -
------------ ----------- ----------- ----------- ---------- ----------- -----------
Net assets available for
plan benefits $ 97,629 $ 287,340 $ 325,958 $ 242,991 $ 61,028 $ 117,182 $ 109,521
============ =========== =========== ========== =========== =========== ===========
<PAGE>
11
Loan
Fund Total
<S> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust $ 31,468
Prudential Insurance
Company of America 15,758
Metropolitan Life
Insurance Company 39,552
Fidelity 1,716
Connecticut General 435
Monumental Life
Insurance Company 457
At fair value:
Fidelity Equity
Income Fund* 287,340
Raytheon Company
Common Stock Fund* 321,152
BT Pyramid Equity
Index Fund* 241,676
Fidelity Balanced
Fund 61,028
Fidelity Magellan
Fund* 117,182
Fidelity Blue
Chip Fund* 109,521
Loans receivable
from participants $ 37,300 37,300
----------- ------------
Total investments 37,300 1,264,585
----------- ------------
Receivables:
Accrued investment income
and other receivables 2,417
Cash and cash equivalents 13,742
----------- ------------
Total assets 37,300 1,280,744
----------- ------------
Liabilities:
Payable for outstanding
purchases 776
Accrued expenses and
other payables 1,019
---------- ------------
Total liabilities - 1,795
---------- ------------
Net assets available for
plan benefits $ 37,300 $ 1,278,949
========== ============
</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 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 $ 29,087
Prudential Insurance
Company of America 18,041
Metropolitan Life
Insurance Company 30,751
At fair value:
Fidelity Equity Income Fund* $ 214,116
Raytheon Company Common Stock Fund* $ 202,655
BT Pyramid Equity Index Fund* $ 118,530
Fidelity Balanced Fund $ 32,784
Fidelity Magellan Fund* $ 40,215
Fidelity Blue Chip Fund*
Loans receivable from participants*
------------ ----------- ----------- ----------- ---------- ----------
Total investments 77,879 214,116 202,655 118,530 32,784 40,215
------------ ----------- ----------- ----------- ---------- ----------
Receivables:
Accrued investment income
and other receivables 1,491 284
Cash and cash equivalents 767 3,667 1,164
------------ ----------- ----------- ----------- ---------- ----------
Total assets 78,646 214,116 207,813 119,978 32,784 40,215
------------ ----------- ----------- ----------- ---------- ----------
Liabilities:
Payable for outstanding purchases 1,723
Accrued expenses and other
payables 402 294
------------ ----------- ----------- ---------- ----------- ----------
Total liabilities 2,125 294
------------ ----------- ----------- ---------- ----------- ----------
Net assets available for plan
benefits $ 78,646 $ 214,116 $ 205,688 $ 119,684 $ 32,784 $ 40,215
============ =========== =========== =========== ========== ==========
*Represents more than 5% of net assets available for plan benefits
<PAGE>
13
Blue Chip Loan
Fund Fund Total
<S> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust $ 29,087
Prudential Insurance
Company of America 18,041
Metropolitan Life
Insurance Company 30,751
At fair value:
Fidelity Equity Income Fund* 214,116
Raytheon Company Common Stock Fund* 202,655
BT Pyramid Equity Index Fund* 118,530
Fidelity Balanced Fund 32,784
Fidelity Magellan Fund* 40,215
Fidelity Blue Chip Fund* $ 35,416 35,416
Loans receivable from participants* $ 56,395 56,395
---------- ----------- -----------
Total investments 35,416 56,395 777,990
---------- ----------- ------------
Receivables:
Accrued investment income
and other receivables 1,775
Cash and cash equivalents 5,598
---------- ----------- ------------
Total assets 35,416 56,395 785,363
---------- ----------- ------------
Liabilities:
Payable for outstanding purchases 1,723
Accrued expenses and other
payables 696
---------- ---------- ------------
Total liabilities 2,419
---------- ---------- ------------
Net assets available for plan
benefits $ 35,416 $ 56,395 $ 782,944
========== =========== ============
*Represents more than 5% of net assets available for plan benefits
</TABLE>
<PAGE>
14
<TABLE>
<CAPTION>
The following is a summary of changes in net assets available for plan
benefits by fund for the year ended December 31, 1998:
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
(depreciation) of
investments $ (1,958) $ 22,738 $ 73,332 $ 63,126 $ 7,302 $ 23,815
Interest & Dividends 6,004 14,922 3,475 4,462
----------- ------------ ----------- ------------ ------------ ------------
4,046 37,660 73,332 63,126 10,777 28,277
----------- ------------ ----------- ------------ ------------ ------------
Contributions and deferrals:
Employee deferrals 18,843 47,068 57,329 43,191 7,832 30,821
Employer contributions 26,493 13,859 18,635 11,718 1,788 7,816
Transfers 12,894 (3,898) 12,411 18,172 7,752
------------ ------------ ----------- ------------ ----------- ------------
45,336 73,821 72,066 67,320 27,792 46,389
------------ ------------ ----------- ------------ ------------ ------------
Total additions 49,382 111,481 145,398 130,446 38,569 74,666
------------ ------------ ----------- ------------ ------------ ------------
Deductions from net assets
attributable to:
Distributions to
participants 17,064 11,869 24,719 14,451 2,156 5,996
Administrative expenses 7 19 20 11 3 4
Transfers 13,295
------------ ------------ ----------- ------------ ------------- ------------
Total deductions 17,071 25,183 24,739 14,462 2,159 6,000
------------ ------------ ----------- ------------ ------------- ------------
Interfund transfers (13,328) (13,074) (389) 7,323 (8,166) 8,301
------------ ------------ ----------- ------------ ------------- ------------
Increase/(Decrease)
in net assets 18,983 73,224 120,270 123,307 28,244 76,967
Net assets, beginning
of year 78,646 214,116 205,688 119,684 32,784 40,215
------------ ------------ ----------- ------------ ------------- ------------
Net assets, end of year $ 97,629 $ 287,340 $ 325,958 $ 242,991 $ 61,028 $ 117,182
============ ============ =========== ============ ============= ============
<PAGE>
15
Blue
Chip Loan
Fund Fund Total
<S> <C> <C> <C>
Additions to net assets
attributable to:
Investment income:
Net appreciation of
investments $ 21,082 $ 209,437
Interest & Dividends 3,285 $ 2,675 34,823
---------- ------------ -------------
24,367 2,675 244,260
---------- ------------ -------------
Contributions and deferrals:
Employee deferrals 34,909 239,993
Employer contributions 6,774 87,083
Transfers 7,974 55,305
---------- ------------ -------------
49,657 382,381
---------- ------------ -------------
Total additions 74,024 2,675 626,641
---------- ------------ -------------
Deductions from net assets
attributable to:
Distributions to
participants 2,639 21,817 100,711
Administrative expenses 4 - 68
Transfers 16,562 29,857
---------- ------------ --------------
Total deductions 2,643 38,379 130,636
---------- ------------ --------------
Interfund transfers 2,724 16,609
----------- ------------ --------------
Increase/(Decrease)
in net assets 74,105 (19,095) 496,005
Net assets, beginning
of year 35,416 56,395 782,944
----------- ----------- --------------
Net assets, end of year $ 109,521 $ 37,300 $ 1,278,949
=========== =========== ==============
</TABLE>
<PAGE>
16
J. Master Trust:
All plan investments are included under the Master Trust. At December 31,
1998, assets of the Plan represented 0.02% of the total assets under the
Master Trust. This has not changed from 0.02% at December 31, 1997.
The following is a summary of net assets available for plan benefits by
fund under the Master Trust as of December 31, 1998:
<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* $ 473,258,791
Prudential Life Insurance
Company of America 236,989,116
Metropolitan Life
Insurance Company* 594,847,154
Fidelity 25,803,449
Connecticut General 6,538,482
Monumental Life Insurance
Company 6,869,338
At fair value:
Fidelity Equity Income
Fund* $1,464,615,296
Raytheon Company Common
Stock Fund* $ 799,542,751
BT Pyramid Equity
Index Fund* $ 745,602,791
Fidelity Balanced Fund* $ 442,796,289
Fidelity Magellan Fund* $ 379,680,454
Fidelity Blue Chip Fund*
Templeton Foreign I Fund
Fidelity Investment Grade
Bond Fund
Fidelity Retirement
Money Market
Vanguard Winsor
Vanguard Wellesley
TRP Small Cap Stock
Raytheon Class A Wasting
Stock Fund
Raytheon GMH Wasting
Stock Fund
Loans receivable from
participants
-------------- -------------- -------------- -------------- -------------- --------------
Total investments 1,344,306,330 1,464,615,296 799,542,751 745,602,791 442,796,289 379,680,454
-------------- -------------- -------------- -------------- -------------- --------------
Receivables:
Employer contribution
Accrued investment income
and other receivables 4,748,948 1,573,604
Transfer receivables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803
Cash and cash equivalents 123,969,201 11,004,025 3,330,147
-------------- -------------- -------------- -------------- -------------- --------------
Total assets 2,048,537,201 2,226,757,712 1,255,380,751 967,248,229 755,173,618 616,369,257
-------------- -------------- -------------- -------------- -------------- --------------
Liabilities:
Payable for outstanding
purchases 1,932,125
Accrued expenses and
other payables 1,853,618 844,977
Transfer payables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803
-------------- -------------- -------------- -------------- -------------- --------------
Total liabilities 580,261,670 762,142,416 443,870,770 217,586,664 312,377,329 236,688,803
-------------- -------------- -------------- -------------- -------------- --------------
Net assets available for
plan benefits $1,468,275,531 $1,464,615,296 $ 811,509,981 $ 749,661,565 $ 442,796,289 $ 379,680,454
============== ============== ============== ============== ============== ==============
<PAGE>
17
Templeton Investment Retirement Vanguard Vanguard
Blue Chip Foreign I Grade Money Winsor Wellesley
Fund Fund Bond Fund Market Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust*
Prudential Life Insurance
Company of America
Metropolitan Life
Insurance Company*
Fidelity
Connecticut General
Monumental Life Insurance
Company
At fair value:
Fidelity Equity Income
Fund*
Raytheon Company Common
Stock Fund*
BT Pyramid Equity
Index Fund*
Fidelity Balanced Fund*
Fidelity Magellan Fund*
Fidelity Blue Chip Fund* $ 391,787,509
Templeton Foreign I Fund $ 6,966,704
Fidelity Investment Grade
Bond Fund $ -
Fidelity Retirement
Money Market $ 13,202,524
Vanguard Winsor $ 41
Vanguard Wellesley $ 18
TRP Small Cap Stock
Raytheon Class A Wasting
Stock Fund
Raytheon GMH Wasting
Stock Fund
Loans receivable from
participants
-------------- -------------- -------------- ------------- ------------- --------------
Total investments 391,787,509 6,966,704 - 13,202,524 41 18
Receivables:
Employer contribution 3,595,261
Accrued investment income
and other receivables
Transfer receivables 191,269,141 6,966,652 16,715,590
Cash and cash equivalents
-------------- -------------- -------------- ------------- ------------- --------------
Total assets 583,056,650 13,933,356 - 33,513,375 41 18
-------------- -------------- -------------- ------------- ------------- --------------
Liabilities:
Payable for outstanding
purchases
Accrued expenses and
other payables
Transfer payables 191,269,141 6,966,652 16,715,590
-------------- -------------- -------------- ------------- ------------- --------------
Total liabilities 191,269,141 6,966,652 - 16,715,590 - -
-------------- -------------- -------------- ------------- ------------- --------------
Net assets available for
plan benefits $ 391,787,509 $ 6,966,704 $ - $ 16,797,785 $ 41 $ 18
============== ============== ============== ============== ============== ==============
<PAGE>
18
TRP Small RTN.A GMH
Cap Stock Wasting Wasting Loan
Fund Fund Fund Fund Other(1) Total
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $ 473,258,791
Prudential Life Insurance
Company of America 236,989,116
Metropolitan Life
Insurance Company* 594,847,154
Fidelity 25,803,449
Connecticut General 6,538,482
Monumental Life Insurance
Company 6,869,338
At fair value:
Fidelity Equity Income
Fund* 1,464,615,296
Raytheon Company Common
Stock Fund* 799,542,751
BT Pyramid Equity
Index Fund* 745,602,791
Fidelity Balanced Fund* 442,796,289
Fidelity Magellan Fund* 379,680,454
Fidelity Blue Chip Fund* 391,787,509
Templeton Foreign I Fund 6,966,704
Fidelity Investment Grade
Bond Fund -
Fidelity Retirement
Money Market 13,202,524
Vanguard Winsor 41
Vanguard Wellesley 18
TRP Small Cap Stock $ 348 348
Raytheon Class A Wasting
Stock Fund $ 116,129,149 116,129,149
Raytheon GMH Wasting
Stock Fund $ 172,859,819 172,859,819
Loans receivable from
participants $ 250,687,865 250,687,865
-------------- -------------- -------------- -------------- ------------- --------------
Total investments 348 116,129,149 172,859,819 250,687,865 - 6,128,177,888
-------------- -------------- -------------- -------------- ------------- --------------
Receivables:
Employer contribution 3,595,261
Accrued investment income
and other receivables 1,193,397 23,640 7,539,589
Transfer receivables 120,761,325 178,295,618 117,046,618 $ 855,826,675 4,035,178,551
Cash and cash equivalents 3,480,490 5,474,220 147,258,083
-------------- -------------- -------------- ------------- -------------- --------------
Total assets 348 241,564,361 356,653,297 367,734,483 855,826,675 10,321,749,372
-------------- -------------- -------------- ------------- -------------- --------------
Liabilities:
Payable for outstanding
purchases 1,932,125
Accrued expenses and
other payables 41,711 62,061 2,802,367
Transfer payables 120,761,325 178,295,618 117,046,618 3,179,351,876
-------------- -------------- -------------- ------------- -------------- --------------
Total liabilities - 120,803,036 178,357,679 117,046,618 - 3,184,086,368
-------------- -------------- -------------- ------------- -------------- --------------
Net assets available for
plan benefits $ 348 $120,761,325 $ 178,295,618 $ 250,687,865 $ 855,826,675 $7,137,663,004
============== ============== ============== ============== ============== ==============
Percentage of Master Trust that are Plan assets - 0.02%
*Represent more than 5% of net assets available for plan benefits
(1) Other represents Raytheon plans merging in from outside the Master Trust.
Note: Not all funds within the Master Trust are available options to
participants in the Plan.
</TABLE>
<PAGE>
19
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, 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:
Investments:
At contract value:
Bankers Trust* $351,035,073
Prudential Life 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 Fund* $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
============ ============ ============ ============ ============ ===========
<PAGE>
20
Templeton Investment Retirement
Blue Chip Foreign I Grade Money Loan
Fund Fund Bond Fund Market Fund Fund Total
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $351,035,073
Prudential Life 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 Fund* 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:
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 $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 - 0.02%
*Represent more than 5% of net assets available for plan benefits
Note: Not all funds within the Master Trust are available options to
participants in the Plan.
</TABLE>
<PAGE>
21
J. Master Trust, Continued:
The following is a summary of investment income by fund under the Master Trust
for the year ended December 31, 1998:
<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>
Investment income:
Net appreciation
(depreciation) of assets $ 30,695 $ 49,019,748 $74,202,083 $149,571,006 $16,091,158 $62,195,801
Interest & Dividends 81,886,632 86,279,682 1,792 42,537,357 13,255,763
----------- ------------ ----------- ------------ ----------- -----------
Total investment
income/(loss) $81,917,327 $135,299,430 $74,203,875 $149,571,006 $58,628,515 $75,451,564
=========== ============ =========== ============ =========== ===========
<PAGE>
22
Templeton Investment Retirement Vanguard Vanguard
Blue Chip Foreign I Grade Money Winsor Wellesley
Fund Fund Bond Fund Market Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Net appreciation
(depreciation) of assets $60,264,181 $(1,095,980) $ 17,635 $2,864,378 $1,379,950
Interest & Dividends 13,550,491 752,610 162,858 $ 349,740
----------- ----------- -------- ---------- ---------- ----------
Total investment
income/(loss) $73,814,672 $ (343,370) $180,493 $ 349,740 $2,864,378 $1,379,950
=========== =========== ======== ========== ========== ==========
<PAGE>
23
TRP Small RTN.A GMH
Cap Stock Wasting Wasting Loan
Fund Fund Fund Fund Total
<S> <C> <C> <C> <C> <C>
Investment income:
Net appreciation
(depreciation) of assets $ 15 $ (35,268) $44,604,025 $459,109,427
Interest & Dividends $15,334,403 254,111,328
----------- ---------- ----------- ----------- ------------
Total investment
income/(loss) $ 15 $ (35,268) $44,604,025 $15,334,403 $713,220,746
=========== ========== =========== =========== ============
</TABLE>
<PAGE>
1
EXHIBIT 99.4a
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (File No. 333-56117) of Raytheon Company of our report
dated June 4, 1999 relating to the financial statements of the Raytheon Savings
and Investment Plan for Puerto Rico Based Employees, which appears in this Form
10-K/A.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 29, 1999
<PAGE>
1
EXHIBIT 99.5
E-SYSTEMS, INC. EMPLOYEE SAVINGS PLAN
FINANCIAL STATEMENTS
TO ACCOMPANY 1998 FORM 5500
ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN
UNDER ERISA OF 1974
FOR THE YEAR ENDED DECEMBER 31, 1998
Certain supplemental schedules that are required by the Employee Retirement
Income Security Act of 1974 (ERISA) are not presented because they are not
applicable.
<PAGE>
2
Report of Independent Accountants
To the Participants and Administrator of
the E-Systems, Inc. Employee Savings Plan:
In our opinion, the accompanying statements of net assets available for plan
benefits and the related statement of changes in net assets available for plan
benefits present fairly, in all material respects, the net assets available for
benefits of The E-Systems, Inc. Employee Savings Plan (the "Plan") at December
31, 1998 and 1997, and the changes in net assets available for benefits for the
year ended December 31, 1998 in conformity with generally accepted accounting
principles. 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 of these statements in
accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of Reportable
Transactions is presented for the purpose of additional analysis and is not a
required part of the basic financial statements but is supplementary information
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. The
supplemental schedule is the responsibility of the Plan's management. The
supplemental schedule has been subjected to the auditing procedures applied in
the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
As discussed in Notes A and G to the financial statements, the Board of
Directors of Raytheon Company voted on December 16, 1998, to merge the Plan into
the Raytheon Savings and Investment Plan.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 4, 1999
<PAGE>
3
E-SYSTEMS, INC. EMPLOYEE SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 1998 and 1997
ASSETS 1998 1997
Investments--at fair value:
Mutual funds $633,702,737 $613,860,560
Collective investment fund 57,431,843 61,180,556
Raytheon common stock fund 31,793,467 35,787,508
Participant loans 21,561,171 22,992,597
------------ ------------
744,489,218 733,821,221
------------ ------------
Receivables:
Employee contributions 798 2,135,509
Employer contributions 755 9,520,806
Other 2,585
------------ ------------
Total assets 744,493,356 745,477,536
------------ ------------
Liabilities:
Transfer payables (Note G) 744,493,356
------------ ------------
Total liabilities 744,493,356 -
------------ ------------
Net assets available for benefits $ - $745,477,536
============ ============
The accompanying notes are an integral part of the financial statements.
<PAGE>
4
E-SYSTEMS, INC. EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
for the year ended December 31, 1998
1998
Additions to net assets attributable to:
Investment income (Notes B, E and H):
Net appreciation of investments $ 38,648,777
Interest & dividends 46,828,458
-------------
85,477,235
Contributions and deferrals:
Employee deferrals 50,750,177
Employer contributions 8,219,008
Transfers (Note F) 100,188
-------------
59,069,373
Total additions 144,546,608
-------------
Deductions from net assets attributable to:
Distributions to participants 145,309,738
Administrative expenses 117,034
Transfers (Note F and G) 744,597,372
-------------
Total deductions 890,024,144
-------------
Decrease in net assets (745,477,536)
Net assets, beginning of year 745,477,536
-------------
Net assets, end of year $ 0
=============
The accompanying notes are an integral part of the financial statements.
<PAGE>
5
E-SYSTEMS, INC. EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
A. Description of Plan:
General
As more fully described in Note G, the E-Systems Inc. Employee Savings Plan (the
"Plan") ceased to exist as of December 31, 1998 and effective January 1, 1999,
the Plan was merged into the Raytheon Savings and Investment Plan (RAYSIP). The
following description of the Plan provides only general information that is
applicable through December 31, 1998. A detailed description of the Plan is
contained in the Plan document.
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").
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. For 1998, the annual employee
deferral for a participant cannot exceed $10,000. Rollover contributions from
other qualified plans are accepted by the Plan.
The Plan also provides for Regular Discretionary Employer 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 participants receives an allocation equal to a certain
percentage, determined by the Board of Directors of Raytheon Company, of the
lesser of (1) base rate of pay, or (2) W-2 pay plus elected reductions.
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 employee 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.
<PAGE>
6
Participants have 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, emergin growth
potential, or cyclical growth deposits.
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.
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.
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.
<PAGE>
7
Vesting
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.
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 last business day of
each quarter. 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 valuation of the Plans 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). Contract value approximates market 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. Participant loans are valued at cost which
approximates fair value.
<PAGE>
8
Security transactions are recorded on trade date. 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. Investment income
includes both dividend and interest income.
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:
The Internal Revenue Service has determined and informed the Company by letter
dated December 1996 that the Plan and related trust are designed in accordance
with applicable sections of the Internal Revenue Code (the "Code"). The Plan has
been amended since 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 applicable requirements of the 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>
9
E. Related Party Transactions:
The Plan's trustee is Vanguard Fiduciary Trust Company (the "Trustee"). The
Trustee holds the funds for the Plan and is responsible for managing the Plan's
investment assets, executing all investment transactions, recording approved
transactions, and, therefore these transactions qualify as party-in-interest.
In accordance with the provisions of the Plan, the Trustee acts as the Plan's
agent for purchases and sales of Raytheon Company Common Stock. For the year
ended December 31, 1998, purchases amounted to $14,712,663 and sales amounted to
$20,317,082.
F. Transfers:
Transfers include transfers of participant accounts, individually and/or
in-groups, between the 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 Plan and similar savings plans of
other companies for those participants who changed companies during the year.
G. Transfer Payables:
As part of an overall effort to minimize plan design differences and increase
administrative efficiencies, the Board of Directors of Raytheon Company voted on
December 16, 1998 to merge the participants and their account balances from the
Plan into the RAYSIP. Effective January 1, 1999, the plan provisions of the
RAYSIP govern. The transfer payables represent a complete transfer of assets.
<PAGE>
10
H. Net Assets Availiable for Plan Benefits by Fund:
The following is a summary of net assets available for plan benefits by
fund as of December 31, 1998:
<TABLE>
<CAPTION>
Raytheon Vanguard Vanguard Vanguard Vanguard Vanguard
Common Retirement Morgan Growth Windsor Money Market Short Term
Stock Fund Savings Trust Fund Fund Reserves Corporate Bond
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments at fair value:
Mutual Funds $113,211,987 $179,362,915 $90,549,186 $17,953,500
Collective investment fund $57,431,843
Raytheon Common Stock Fund $31,793,467
Participant loans
----------- ----------- ------------ ------------ ----------- -----------
Total investments 31,793,467 57,431,843 113,211,987 179,362,915 90,549,186 17,953,500
----------- ----------- ------------ ------------ ----------- -----------
Receivables:
Employee contributions 588 131 (671) (469) 275 43
Employer contributions 186 54 82 151 80 17
Other receivables 595 168 150 404 775 67
----------- ----------- ------------ ------------ ----------- -----------
Total assets 31,794,836 57,432,196 113,211,548 179,363,001 90,550,316 17,953,627
----------- ----------- ------------ ------------ ----------- -----------
Liabilities:
Transfer payables (Note G) 31,794,836 57,432,196 113,211,548 179,363,001 90,550,316 17,953,627
----------- ----------- ------------ ------------ ----------- -----------
Total liabilities 31,794,836 57,432,196 113,211,548 179,363,001 90,550,316 17,953,627
----------- ----------- ------------ ------------ ----------- -----------
Net assets available
for plan benefits $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
=========== =========== ============ ============ =========== ===========
<PAGE>
11
Vanguard Vanguard Vanguard Participant
Index Trust Wellesley International Loan
500 Portfolio Income Fund Value Fund Total
<S> <C> <C> <C> <C> <C>
Assets:
Investments at fair value:
Mutual Funds $175,613,111 $41,019,572 $15,992,466 $633,702,737
Collective investment fund 57,431,843
Raytheon Common Stock Fund 31,793,467
Participant loans $21,561,171 21,561,171
------------ ----------- ----------- ----------- ------------
Total investments 175,613,111 41,019,572 15,992,466 21,561,171 744,489,218
------------ ----------- ----------- ----------- ------------
Receivables:
Employee contributions 564 279 58 798
Employer contributions 135 32 18 755
Other receivables 364 11 51 2,585
------------ ----------- ----------- ----------- ------------
Total assets 175,614,174 41,019,894 15,992,593 21,561,171 744,493,356
------------ ----------- ----------- ----------- ------------
Liabilities:
Transfer payables (Note G) 175,614,174 41,019,894 15,992,593 21,561,171 744,493,356
------------ ----------- ----------- ----------- ------------
Total liabilities 175,614,174 41,019,894 15,992,593 21,561,171 744,493,356
------------ ----------- ----------- ----------- ------------
Net assets available for
plan benefits $ 0 $ 0 $ 0 $ 0 $ 0
============ =========== =========== =========== ============
</TABLE>
<PAGE>
12
H. Net Assets Availiable for Plan Benefits by Fund:
The following is a summary of net assets available for plan benefits by
fund as of December 31, 1997:
<TABLE>
<CAPTION>
Raytheon * Vanguard* Vanguard* Vanguard* Vanguard* Vanguard
Common Retirement Morgan Growth Windsor Money Market Short Term
Stock Fund Savings Trust Fund Fund Reserves Corporate Bond
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments at fair value:
Mutual Funds $97,914,498 $226,774,736 $91,047,417 $16,848,440
Collective investment fund $61,180,556
Raytheon Common Stock Fund $35,787,508
Participant loans
----------- ----------- ----------- ------------ ----------- -----------
Total investments 35,787,508 61,180,556 97,914,498 226,774,736 91,047,417 16,848,440
Receivables:
Employee contributions 141,251 161,840 301,542 629,130 219,638 61,411
Employer contributions 1,597,516 225,700 905,920 1,566,103 2,542,782 142,667
Other Receivables
----------- ----------- ----------- ------------ ----------- -----------
Total assets 37,526,275 61,568,096 99,121,960 228,969,969 93,809,837 17,052,518
----------- ----------- ----------- ------------ ----------- -----------
Liabilities:
----------- ----------- ----------- ------------ ----------- -----------
Total liabilities - - - - - -
----------- ----------- ----------- ------------ ----------- -----------
Net assets available
for plan benefits $37,526,275 $61,568,096 $99,121,960 $228,969,969 $93,809,837 $17,052,518
=========== =========== =========== ============ =========== ===========
<PAGE>
13
Vanguard* Vanguard Vanguard Participant
Index Trust Wellesley International Loan
500 Portfolio Income Fund Value Fund Total
<S> <C> <C> <C> <C> <C>
Assets:
Investments at fair value:
Mutual Funds $134,265,332 $32,126,350 $14,883,787 $613,860,560
Collective investment fund 61,180,556
Raytheon Common Stock Fund 35,787,508
Participant loans $22,992,597 22,992,597
------------ ----------- ----------- ----------- ------------
Total investments 134,265,332 32,126,350 14,883,787 22,992,597 733,821,221
Receivables:
Employee contributions 434,798 109,353 76,546 2,135,509
Employer contributions 1,732,435 462,314 345,369 9,520,806
Other Receivables
------------ ----------- ----------- ----------- ------------
Total assets 136,432,565 32,698,017 15,305,702 22,992,597 745,477,536
------------ ----------- ----------- ----------- ------------
Liabilities:
------------ ----------- ----------- ----------- ------------
Total liabilities - - - - -
------------ ----------- ----------- ----------- ------------
Net assets available
for plan benefits $136,432,565 $32,698,017 $15,305,702 $22,992,597 $745,477,536
=========== =========== =========== =========== ============
*Represents more than 5% of net assets available for plan benefits
</TABLE>
<PAGE>
14
H. Changes in Net Assets Availiable for Plan Benefits by Fund:
The following is a summary of changes in net assets available for plan
benefits by fund as of December 31, 1998:
<TABLE>
<CAPTION>
Raytheon Vanguard Vanguard Vanguard Vanguard Vanguard
Common Retirement Morgan Growth Windsor Money Market Short Term
Stock Fund Savings Trust Fund Fund Reserves Corporate Bond
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributable to:
Investment income
Net appreciation
(depreciation) $3,271,481 $12,070,155 ($16,306,145) $ 38,494
Interest & dividends 461,134 $ 3,816,141 9,102,200 17,415,762 $ 4,980,264 1,125,397
Contributions and transfers:
Employee contributions 3,115,521 2,742,863 8,016,899 13,263,615 3,711,186 1,301,151
Employer contributions 596,771 560,049 1,206,693 2,229,943 763,562 231,953
Transfers (Note F and G) 439 39 598 986 204 37
---------- ----------- ----------- ------------ ------------- -----------
Total additions 7,445,346 7,119,092 30,396,545 16,604,161 9,455,216 2,697,032
Deductions from net assets
attributable to:
Distributions to participants 3,859,905 17,094,278 16,579,289 34,765,672 22,270,456 3,464,245
Administrative expenses 12,228 3,329 14,525 24,010 25,207 2,725
Transfers (Notes F and G) 31,806,164 57,432,195 113,243,716 179,365,102 90,550,316 17,955,055
---------- ----------- ----------- ------------ ----------- -----------
Total deductions 35,678,297 74,529,802 129,837,530 214,154,784 112,845,979 21,422,025
Interfund Transfers (9,293,324) 5,842,614 319,025 (31,419,346) 9,580,926 1,672,475
.
Decrease in net assets (37,526,275) (61,568,096) (99,121,960) (228,969,969) (93,809,837) (17,052,518)
---------- ----------- ----------- ----------- ------------ -----------
Net assets, beginning of year 37,526,275 61,568,096 99,121,960 228,969,969 93,809,837 17,052,518
----------- ----------- ----------- ------------ ------------ -----------
Net assets, end of year $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
=========== ========== =========== ============ ============ ===========
<PAGE>
15
Vanguard Vanguard Vanguard Participant
Index Trust Wellesley International Loan
500 Portfolio Income Fund Value Fund Total
<S> <C> <C> <C> <C> <C>
Additions to net assets
attributable to:
Investment income
Net appreciation
(depreciation) $ 37,725,059 $ 242,309 $ 1,607,424 $38,648,777
Interest & dividends 2,822,467 3,849,330 1,226,704 $2,029,059 46,828,458
Contributions and transfers:
Employee contributions 13,598,274 3,228,244 1,772,424 50,750,177
Employer contributions 1,859,070 485,963 285,004 8,219,008
Transfers (Note F and G) 1,288 168 460 95,969 100,188
------------ ----------- ------------ ------------ ------------
Total additions 56,006,158 7,806,014 4,892,016 2,125,028 144,546,608
Deductions from net assets
attributable to:
Distributions to participants 35,011,683 7,372,390 2,479,399 2,412,421 145,309,738
Administrative expenses 24,800 6,739 3,471 0 117,034
Transfers (Notes F and G) 175,646,449 41,019,895 16,017,309 21,561,171 744,597,372
------------ ----------- ------------ ------------ ------------
Total deductions 210,682,932 48,399,024 18,500,179 23,973,592 890,024,144
Interfund Transfers 18,244,209 7,894,993 (1,697,539) (1,144,033) 0
Decrease in net assets (136,432,565) (32,698,017) (15,305,702) (22,992,597) (745,477,536)
------------ ----------- ----------- ------------ ------------
Net assets, beginning of year 136,432,565 32,698,017 15,305,702 22,992,597 745,477,536
------------ ----------- ----------- ------------ ------------
Net assets, end of year $ 0 $ 0 $ 0 $ 0 $ 0
============ =========== =========== =========== ============
</TABLE>
<PAGE>
16
E-SYSTEMS, INC. EMPLOYEE SAVINGS PLAN
LINE 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
for the year ended December 31, 1998
<TABLE>
<CAPTION>
Cost of Historical Current Value of Assets Historical
Description of Asset Purchase Price Selling Price Cost of Asset on Transaction Date Gain (Loss)
Category (iii)--Series
of securities transactions
<S> <C> <C> <C> <C> <C>
Vanguard 500 Index Fund $81,138,253 $81,138,253
Vanguard 500 Index Fund $77,516,822 $60,408,602 77,516,822 $17,108,220
Vanguard Morgan Growth Fund 40,366,110 40,366,110
Vanguard Morgan Growth Fund 37,139,375 32,953,957 37,139,375 4,185,418
Vanguard Prime Money Market 77,930,088 77,930,088
Vanguard Prime Money Market 78,428,524 78,428,524 78,428,524
Vanguard Windsor Fund 49,282,450 49,282,450
Vanguard Windsor Fund 80,389,112 77,116,825 80,389,112 3,272,287
Vanguard Retirement Savings Trust 27,412,254 27,412,254
Vanguard Retirement Savings Trust 31,161,006 31,161,006 31,161,006
Raytheon Common Stock Fund 25,752,750 25,752,750
Raytheon Common Stock Fund 33,018,710 30,456,483 33,018,710 2,562,227
There were no category (i), (ii) or (iv) reportable transactions during 1998.
</TABLE>
<PAGE>
1
EXHIBIT 99.5a
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (File No. 333-56117) of Raytheon Company of our report
dated June 4, 1999 relating to the financial statements of the Raytheon
E-Systems, Inc. Employee Savings Plan, which appears in this Form 10-K/A.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 29, 1999
<PAGE>
1
EXHIBIT 99.6
RAYTHEON TI SYSTEMS SAVINGS PLAN
FINANCIAL STATEMENTS
TO ACCOMPANY 1998 FORM 5500
ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN
UNDER ERISA OF 1974
FOR THE YEAR ENDED DECEMBER 31, 1998
The supplemental schedules to the Plan's Form 5500 are not required since the
Plan's assets are held in a Master Trust. Accordingly, the Plan administrator
must file detailed financial information, including the supplemental schedules,
separately with the Department of Labor.
<PAGE>
2
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of
the Raytheon TI Systems Savings Plan:
In our opinion, the accompanying statements of net assets available for plan
benefits and the related statement of changes in net assets available for plan
benefits present fairly, in all material respects, the net assets available for
benefits of the Raytheon TI Systems Savings Plan (the "Plan") at December 31,
1998 and 1997, and the changes in net assets available for benefits for the year
ended December 31, 1998 in conformity with generally accepted accounting
principles. 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 of these statements in
accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
As discussed in Notes A and H to the financial statements, the Board of
Directors of Raytheon Company voted on December 16, 1998, to merge the Plan into
the Raytheon Savings and Investment Plan.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 4, 1999
<PAGE>
3
RAYTHEON TI SYSTEMS SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
as of December 31, 1998 and 1997
1998 1997
Assets:
Master trust investments:
At contract value (Notes B, E and I) $ 36,008,015 $ 27,129,250
At fair value (Notes B, F and I) 215,389,507 151,647,372
------------ ------------
251,397,522 178,776,622
------------ ------------
Receivables:
Accrued investment income and
other receivables 422,047 528,072
Cash and cash equivalents 4,278,946 1,673,631
------------ ------------
Total assets 256,098,515 180,978,325
------------ ------------
Liabilities:
Payable for outstanding purchases 132,047 533,996
Accrued expenses and other payables 179,030 192,678
Transfer payables (Note H) 255,787,438
------------ ------------
Total liabilities 256,098,515 726,674
------------ ------------
Net assets available for plan benefits $ - $180,251,651
============ ============
The accompanying notes are an integral part of the financial statements.
<PAGE>
4
RAYTHEON TI SYSTEMS SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1998
Additions to net assets attributable to:
Investment income (Notes B, E and I):
Net appreciation of investments $ 25,229,092
Interest & Dividends 8,294,811
------------
33,523,903
Contributions and deferrals:
Employee deferrals 43,369,679
Employer contributions 8,443,415
Transfers (Note G) 32,797
------------
51,845,891
Total additions 85,369,794
------------
Deductions from net assets attributable to:
Distributions to participants 9,757,925
Administrative expenses 16,103
Transfers (Note G and H) 255,847,417
------------
Total deductions 265,621,445
------------
Decrease in net assets (180,251,651)
Net assets, beginning of year 180,251,651
------------
Net assets, end of year $ -
============
The accompanying notes are an integral part of the financial statements.
<PAGE>
5
RAYTHEON TI SYSTEMS SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
A. Description of Plan:
General
As more fully described in Note H, the Raytheon TI Systems Savings Plan (the
"Plan") ceased to exist as of December 31, 1998 and effective January 1, 1999,
was merged into the Raytheon Savings and Investment Plan (RAYSIP). The following
description of the Plan provides only general information that is applicable
through December 31, 1998. Participants should refer to the plan document for a
complete description of the Plan's provisions.
The Plan was established on July 11, 1997 for former employees of Texas
Instruments. The Plan is a defined contribution plan covering certain employees
of Raytheon Company (the "Company"). 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 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 combined with the investments of other similar
defined contribution plans of the Company into the Raytheon Company Master Trust
for Defined Contribution Plans ("Master Trust"). 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. For 1998, the annual employee
deferral for a participant cannot exceed $10,000. 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) the Fidelity Equity Income Fund which invests
in shares of a mutual fund consisting primarily of income-producing equity
securities, (c) a Raytheon Common Stock Fund which invests in shares of Raytheon
Company 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) the Fidelity Balanced Fund which invests
<PAGE>
6
in shares of a mutual fund consisting primarily of equity securities, bonds and
money market instruments, (f) the Fidelity Magellan Fund, a growth fund which
invests primarily in equities of companies of all types and sizes, (g) the
Fidelity 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 Fidelity Investment Grade
Bond Fund which invests primarily in U.S. government and corporate bonds
including, without limitation, index funds and mutual funds. The Fidelity
Investment Grade Bond Fund was eliminated as an option during 1998 and balances
were transferred into the Fixed Income Fund. Dividends and distributions from
investments of the Fidelity Equity Income Fund, the Raytheon Common Stock Fund,
the Stock Index Fund, the Fidelity Balanced Fund, the Fidelity Magellan Fund,
the Fidelity Blue Chip Fund, the Templeton Foreign I Fund and the Fidelity
Investment Grade Bond 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 fully and immediately vested in their entire account balance
including voluntary deferrals, employer contributions and all investment
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 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.
<PAGE>
7
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. Contract value approximates 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. Participant loans are valued at cost, which approximates fair value.
Security transactions are recorded on the 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. Investment income
includes both dividends and interest income.
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.
<PAGE>
8
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 Internal Revenue Service has determined and informed the Company by letter
dated March 1999 that the Plan, as adopted on July 11, 1997, and related trust
are designed in accordance with applicable sections of the Code. The Plan has
been amended since applying for 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 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, 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 the Code.
E. Investment Contracts:
The Plan invests in collateralized fixed income investment portfolios which are
managed by insurance companies and investment management firms. 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>
9
Annualized Credited
Average Yield Interest Rate
For the year ended December 31, 1998:
Banker's Trust (WBS 92-485) 6.85% 6.85%
Metropolitan Life Insurance
Company (GIC GA-12908) 6.58% 6.58%
Metropolitan Life Insurance
Company (GIC GA-13659) 6.10% 6.10%
Prudential Asset Management
Company (GIC 917163-001) 6.75% 6.75%
Connecticut General (GIC 0025174) 5.58% 5.58%
Fidelity IPL (633-GCDC) 5.62% 5.62%
Monumental Life Insurance
Company (GIC BDA00463FR-00) 7.84% 7.84%
For the year ended December 31, 1997:
Banker's 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:
The Plan's trustee is Fidelity Management Trust Company (the "Trustee"). The
Trustee holds the funds for the Plan and is responsible for managing the Plan's
investment assets, executing all investment transactions, recording approved
transactions, and, therefore these transactions qualify as party-in-interest.
In accordance with the provisions of the Plan, the Trustee acts as the Plan's
agent for purchases and sales of shares of Raytheon Company common stock. These
transactions are performed on a Master Trust level. For the Master Trust,
purchases amounted to $288,116,995 and sales amounted to $257,878,566 for the
year ended December 31, 1998.
G. Transfers:
Transfers include transfers of participant accounts, individually and/or
in-groups, between the 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 Plan and similar savings plans of
other companies for those participants who changed companies during the year.
H. Transfer Payables:
As part of an overall effort to minimize plan design differences and increase
administrative efficiencies, the Board of Directors of Raytheon Company voted on
December 16, 1998 to merge the participants and their account balances into the
RAYSIP. The Plan ceased to exist on December 31, 1998 and effective January 1,
1999, the plan provisions of the RAYSIP govern. The transfer payable amount
represents a complete transfer of assets to the RAYSIP.
<PAGE>
10
I. Fund Data:
The following is a summary of net assets available for plan benefits by
fund as of December 31, 1998:
<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:
Master trust investments:
At contract value:
Bankers Trust $ 12,676,508
Prudential Life Insurance
Company of America 6,347,889
Metropolitan Life
Insurance Company 15,933,322
Fidelity 691,160
Connecticut General 175,137
Monumental Life
Insurance Company 183,999
At fair value:
Fidelity Equity
Income Fund $ 17,276,885
Raytheon Company
Common Stock Fund $54,644,741
BT Pyramid Equity
Index Fund $46,192,796
Fidelity Balanced
Fund $13,627,478
Fidelity Magellan
Fund $19,552,160
Fidelity Blue
Chip Fund $41,109,867
Templeton Foreign I
Fund
Loans receivable
from participants
------------ ----------- ----------- ----------- ----------- ----------- -----------
Total investments 36,008,015 17,276,885 54,644,741 46,192,796 13,627,478 19,552,160 41,109,867
------------ ----------- ----------- ----------- ----------- ----------- -----------
Receivables:
Accrued investment income
and other receivables 324,556 97,491
Cash and cash equivalents 3,320,586 752,045 206,315
------------ ----------- ----------- ----------- ----------- ----------- -----------
Total assets 39,328,601 17,276,885 55,721,342 46,496,602 13,627,478 19,552,160 41,109,867
------------ ----------- ----------- ----------- ----------- ----------- -----------
Liabilities:
Payable for outstanding
purchases 132,047
Accrued expenses and other
payables 126,681 52,349
Transfer payables 39,328,601 17,276,885 55,462,614 46,444,253 13,627,478 19,552,160 41,109,867
------------ ----------- ----------- ----------- ----------- ----------- -----------
Total liabilities 39,328,601 17,276,885 55,721,342 46,496,602 13,627,478 19,552,160 41,109,867
------------ ----------- ----------- ----------- ----------- ----------- -----------
Net assets available for
plan benefits $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
============ =========== =========== ========== =========== =========== ===========
<PAGE>
11
Templeton
Foreign I Loan
Account Fund Total
<S> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust $ 12,676,508
Prudential Insurance
Company of America 6,347,889
Metropolitan Life
Insurance Company 15,933,322
Fidelity 691,160
Connecticut General 175,137
Monumental Life
Insurance Company 183,999
At fair value:
Fidelity Equity
Income Fund 17,276,885
Raytheon Company
Common Stock Fund 54,644,741
BT Pyramid Equity
Index Fund 46,192,796
Fidelity Balanced
Fund 13,627,478
Fidelity Magellan
Fund 19,552,160
Fidelity Blue
Chip Fund 41,109,867
Templeton Foreign I
Fund $ 6,966,650 6,966,650
Loans receivable
from participants $16,018,930 16,018,930
----------- ----------- ------------
Total investments 6,966,650 16,018,930 251,397,522
----------- ----------- ------------
Receivables:
Accrued investment income
and other receivables 422,047
Cash and cash equivalents 4,278,946
----------- ----------- ------------
Total assets 6,966,650 16,018,930 256,098,515
----------- ----------- ------------
Liabilities:
Payable for outstanding
purchases 132,047
Accrued expenses and
other payables 179,030
Transfer payables 6,966,650 16,018,930 255,787,438
----------- ----------- ------------
Total liabilities 6,966,650 16,018,930 256,098,515
----------- ----------- ------------
Net assets available for
plan benefits $ 0 $ 0 $ 0
=========== =========== ============
</TABLE>
<PAGE>
12
I. 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 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>
13
Templeton Investment
Blue Chip Foreign I Grade Loan
Fund Fund Bond Fund Fund Total
<S> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $ 10,132,377
Prudential Life 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 Fund* 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
============ ========== ========== ============ ============
*Represent more than 5% of net assets available for plan benefits
</TABLE>
<PAGE>
14
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, 1998:
<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>
Additions to net assets
attributable to:
Investment income:
Net appreciation
(depreciation) of
investments $ 3,295 $ 584,690 $ 5,158,554 $ 9,280,287 $ 829,007 $ 3,117,037 $ 7,334,555
Interest & Dividends 1,993,246 874,982 1,116,139 717,602 1,421,709
----------- ------------ ----------- ----------- ----------- ------------ ------------
1,996,541 1,459,672 5,158,554 9,280,287 1,945,146 3,834,639 8,756,264
----------- ------------ ----------- ----------- ----------- ------------ ------------
Contributions and deferrals:
Employee deferrals 6,104,144 5,975,544 3,061,022 7,954,043 2,632,497 5,181,263 8,707,144
Employer contributions 1,130,391 1,217,093 659,688 1,608,662 479,166 944,884 1,701,689
Transfers 14,206 42,771 3,898 (12,411) (1,814) (1,765)
------------ ------------ ----------- ----------- ----------- ------------ ------------
7,248,741 7,235,408 3,724,608 9,550,294 3,111,663 6,124,333 10,407,068
------------ ------------ ----------- ----------- ----------- ------------ ------------
Total additions 9,245,282 8,695,080 8,883,162 18,830,581 5,056,809 9,958,972 19,163,332
------------ ------------ ----------- ----------- ----------- ------------ ------------
Deductions from net assets
attributable to:
Distributions to
participants 1,860,825 745,470 1,703,163 1,536,525 675,276 535,393 1,528,144
Administrative expenses 2,492 940 5,698 2,756 767 764 1,998
Transfers (13,295) 27,074 62,761
Transfers plan mergers 39,328,602 17,276,885 55,462,614 46,444,253 13,627,478 19,552,160 41,109,867
------------ ------------ ----------- ------------ ----------- ------------ ------------
Total deductions 41,191,919 18,010,000 57,198,549 48,046,295 14,303,521 20,088,317 42,640,009
------------ ------------ ----------- ------------ ----------- ------------ ------------
Interfund transfers 4,550,112 1,060,820 (15,443,534) 1,506,164 1,608,070 3,494,192 4,716,038
------------ ------------ ----------- ------------ ----------- ------------ ------------
Decrease in net assets (27,396,525) (8,254,100) (63,758,921) (27,709,550) (7,638,642) (6,635,153) (18,760,639)
Net assets, beginning
of year 27,396,525 8,254,100 63,758,921 27,709,550 7,638,642 6,635,153 18,760,639
------------ ------------ ----------- ----------- ------------ ------------ ------------
Net assets, end of year $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
============ ============ =========== =========== ============ ============ ============
<PAGE>
15
Templeton Investment
Foreign I Grade Bond Loan
Fund Fund Fund Total
<S> <C> <C> <C> <C>
Additions to net assets
attributable to:
Investment income:
Net appreciation
(depreciation) of
investments $(1,095,967) $ 17,634 $ 25,229,092
Interest & Dividends 752,610 162,858 $ 1,255,665 8,294,811
----------- ------------ ------------ -------------
(343,357) 180,492 1,255,665 33,523,903
----------- ------------ ------------- -------------
Contributions and deferrals:
Employee deferrals 2,897,062 856,960 43,369,679
Employer contributions 598,350 103,492 8,443,415
Transfers (12,088) 32,797
---------- ------------ ------------- -------------
3,495,412 960,452 (12,088) 51,845,891
----------- ------------ ------------- -------------
Total additions 3,152,055 1,140,944 1,243,577 85,369,794
----------- ------------ ------------- -------------
Deductions from net assets
attributable to:
Distributions to
participants 274,069 123,832 775,228 9,757,925
Administrative expenses 514 174 16,103
Transfers (16,562) 59,978
Transfers plan mergers 6,966,650 16,018,930 255,787,439
----------- ------------ -------------- -------------
Total deductions 7,241,233 124,006 16,777,596 265,621,445
----------- ------------ -------------- -------------
Interfund transfers (1,381,998) (2,565,063) 2,455,199
----------- ----------- -------------- -------------
Decrease in net assets (5,471,176) (1,548,125) (13,078,820) (180,251,651)
----------- ----------- -------------- -------------
Net assets, beginning
of year 5,471,176 1,548,125 13,078,820 180,251,651
------------ ----------- -------------- -------------
Net assets, end of year $ 0 $ 0 $ 0 $ 0
============ =========== ============= =============
</TABLE>
<PAGE>
16
J. Master Trust:
All plan investments are included under the Master Trust. At December 31,
1998, assets of the Plan represented 0% of the total assets under the Master
Trust. This has decreased from 5.1% at December 31, 1997.
The following is a summary of net assets available for plan benefits by
fund under the Master Trust as of December 31, 1998:
<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* $ 473,258,791
Prudential Life Insurance
Company of America 236,989,116
Metropolitan Life
Insurance Company* 594,847,154
Fidelity 25,803,449
Connecticut General 6,538,482
Monumental Life Insurance
Company 6,869,338
At fair value:
Fidelity Equity Income
Fund* $1,464,615,296
Raytheon Company Common
Stock Fund* $ 799,542,751
BT Pyramid Equity
Index Fund* $ 745,602,791
Fidelity Balanced Fund* $ 442,796,289
Fidelity Magellan Fund* $ 379,680,454
Fidelity Blue Chip Fund*
Templeton Foreign I Fund
Fidelity Investment Grade
Bond Fund
Fidelity Retirement
Money Market
Vanguard Winsor
Vanguard Wellesley
TRP Small Cap Stock
Raytheon Class A Wasting
Stock Fund
Raytheon GMH Wasting
Stock Fund
Loans receivable from
participants
-------------- -------------- -------------- -------------- -------------- --------------
Total investments 1,344,306,330 1,464,615,296 799,542,751 745,602,791 442,796,289 379,680,454
-------------- -------------- -------------- -------------- -------------- --------------
Receivables:
Employer contribution
Accrued investment income
and other receivables 4,748,948 1,573,604
Transfer receivables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803
Cash and cash equivalents 123,969,201 11,004,025 3,330,147
-------------- -------------- -------------- -------------- -------------- --------------
Total assets 2,048,537,201 2,226,757,712 1,255,380,751 967,248,229 755,173,618 616,369,257
-------------- -------------- -------------- -------------- -------------- --------------
Liabilities:
Payable for outstanding
purchases 1,932,125
Accrued expenses and
other payables 1,853,618 844,977
Transfer payables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803
-------------- -------------- -------------- -------------- -------------- --------------
Total liabilities 580,261,670 762,142,416 443,870,770 217,586,664 312,377,329 236,688,803
-------------- -------------- -------------- -------------- -------------- --------------
Net assets available for
plan benefits $1,468,275,531 $1,464,615,296 $ 811,509,981 $ 749,661,565 $ 442,796,289 $ 379,680,454
============== ============== ============== ============== ============== ==============
<PAGE>
17
Templeton Investment Retirement Vanguard Vanguard
Blue Chip Foreign I Grade Money Winsor Wellesley
Fund Fund Bond Fund Market Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust*
Prudential Life Insurance
Company of America
Metropolitan Life
Insurance Company*
Fidelity
Connecticut General
Monumental Life Insurance
Company
At fair value:
Fidelity Equity Income
Fund*
Raytheon Company Common
Stock Fund*
BT Pyramid Equity
Index Fund*
Fidelity Balanced Fund*
Fidelity Magellan Fund*
Fidelity Blue Chip Fund* $ 391,787,509
Templeton Foreign I Fund $ 6,966,704
Fidelity Investment Grade
Bond Fund $ -
Fidelity Retirement
Money Market $ 13,202,524
Vanguard Winsor $ 41
Vanguard Wellesley $ 18
TRP Small Cap Stock
Raytheon Class A Wasting
Stock Fund
Raytheon GMH Wasting
Stock Fund
Loans receivable from
participants
-------------- -------------- -------------- ------------- ------------- --------------
Total investments 391,787,509 6,966,704 - 13,202,524 41 18
-------------- -------------- -------------- ------------- ------------- --------------
Receivables:
Employer contribution 3,595,261
Accrued investment income
and other receivables
Transfer receivables 191,269,141 6,966,652 16,715,590
Cash and cash equivalents
-------------- -------------- -------------- ------------- ------------- --------------
Total assets 583,056,650 13,933,356 - 33,513,375 41 18
-------------- -------------- -------------- ------------- ------------- --------------
Liabilities:
Payable for outstanding
purchases
Accrued expenses and
other payables
Transfer payables 191,269,141 6,966,652 16,715,590
-------------- -------------- -------------- ------------- ------------- --------------
Total liabilities 191,269,141 6,966,652 - 16,715,590 - -
-------------- -------------- -------------- ------------- ------------- --------------
Net assets available for
plan benefits $ 391,787,509 $ 6,966,704 $ - $ 16,797,785 $ 41 $ 18
============== ============== ============== ============== ============== ==============
<PAGE>
18
TRP Small RTN.A GMH
Cap Stock Wasting Wasting Loan
Fund Fund Fund Fund Other(1) Total
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $ 473,258,791
Prudential Life Insurance
Company of America 236,989,116
Metropolitan Life
Insurance Company* 594,847,154
Fidelity 25,803,449
Connecticut General 6,538,482
Monumental Life Insurance
Company 6,869,338
At fair value:
Fidelity Equity Income
Fund* 1,464,615,296
Raytheon Company Common
Stock Fund* 799,542,751
BT Pyramid Equity
Index Fund* 745,602,791
Fidelity Balanced Fund* 442,796,289
Fidelity Magellan Fund* 379,680,454
Fidelity Blue Chip Fund* 391,787,509
Templeton Foreign I Fund 6,966,704
Fidelity Investment Grade
Bond Fund -
Fidelity Retirement
Money Market 13,202,524
Vanguard Winsor 41
Vanguard Wellesley 18
TRP Small Cap Stock $ 348 348
Raytheon Class A Wasting
Stock Fund $ 116,129,149 116,129,149
Raytheon GMH Wasting
Stock Fund $ 172,859,819 172,859,819
Loans receivable from
participants $ 250,687,865 250,687,865
-------------- -------------- -------------- -------------- ------------- --------------
Total investments 348 116,129,149 172,859,819 250,687,865 - 6,128,177,888
-------------- -------------- -------------- -------------- ------------- --------------
Receivables:
Employer contribution 3,595,261
Accrued investment income
and other receivables 1,193,397 23,640 7,539,589
Transfer receivables 120,761,325 178,295,618 117,046,618 $ 855,826,675 4,035,178,551
Cash and cash equivalents 3,480,490 5,474,220 147,258,083
-------------- -------------- -------------- ------------- -------------- --------------
Total assets 348 241,564,361 356,653,297 367,734,483 855,826,675 10,321,749,372
-------------- -------------- -------------- ------------- -------------- --------------
Liabilities:
Payable for outstanding
purchases 1,932,125
Accrued expenses and
other payables 41,711 62,061 2,802,367
Transfer payables 120,761,325 178,295,618 117,046,618 3,179,351,876
-------------- -------------- -------------- ------------- -------------- --------------
Total liabilities - 120,803,036 178,357,679 117,046,618 - 3,184,086,368
-------------- -------------- -------------- ------------- -------------- --------------
Net assets available for
plan benefits $ 348 $120,761,325 $ 178,295,618 $ 250,687,865 $ 855,826,675 $7,137,663,004
============== ============== ============== ============== ============== ==============
Percentage of Master Trust that are Plan assets - 0.00%
*Represent more than 5% of net assets available for plan benefits
(1) Other represents Raytheon plans merging in from outside the Master Trust.
Note: Not all funds within the Master Trust are available options to
participants in the Plan.
</TABLE>
<PAGE>
19
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, 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:
Investments:
At contract value:
Bankers Trust* $351,035,073
Prudential Life 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 Fund* $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
============ ============ ============ ============ ============ ===========
<PAGE>
20
Templeton Investment Retirement
Blue Chip Foreign I Grade Money Loan
Fund Fund Bond Fund Market Fund Fund Total
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $351,035,073
Prudential Life 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 Fund* 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 - 5.1%
*Represent more than 5% of net assets available for plan benefits
Note: Not all funds within the Master Trust are available options to
participants in the Plan.
</TABLE>
<PAGE>
21
J. Master Trust, Continued:
The following is a summary of investment income by fund under the Master Trust
for the year ended December 31, 1998:
<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>
Investment income:
Net appreciation
(depreciation) of assets $ 30,695 $ 49,019,748 $74,202,083 $149,571,006 $16,091,158 $62,195,801
Interest & Dividends 81,886,632 86,279,682 1,792 42,537,357 13,255,763
----------- ------------ ----------- ------------ ----------- -----------
Total investment
income/(loss) $81,917,327 $135,299,430 $74,203,875 $149,571,006 $58,628,515 $75,451,564
=========== ============ =========== ============ =========== ===========
<PAGE>
22
Templeton Investment Retirement Vanguard Vanguard
Blue Chip Foreign I Grade Money Winsor Wellesley
Fund Fund Bond Fund Market Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Net appreciation
(depreciation) of assets $60,264,181 $(1,095,980) $ 17,635 $2,864,378 $1,379,950
Interest & Dividends 13,550,491 752,610 162,858 $ 349,740
----------- ----------- -------- ---------- ---------- ----------
Total investment
income/(loss) $73,814,672 $ (343,370) $180,493 $ 349,740 $2,864,378 $1,379,950
=========== =========== ======== ========== ========== ==========
<PAGE>
23
TRP Small RTN.A GMH
Cap Stock Wasting Wasting Loan
Fund Fund Fund Fund Total
<S> <C> <C> <C> <C> <C>
Investment income:
Net appreciation
(depreciation) of assets $ 15 $ (35,268) $44,604,025 $459,109,427
Interest & Dividends $15,334,403 254,111,328
----------- ---------- ----------- ----------- ------------
Total investment
income/(loss) $ 15 $ (35,268) $44,604,025 $15,334,403 $713,220,755
=========== ========== =========== =========== ============
</TABLE>
<PAGE>
1
EXHIBIT 99.6a
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (File No. 333-56117) of Raytheon Company of our report
dated June 4, 1999 relating to the financial statements of the Raytheon TI
Systems Savings Plan, which appears in this Form 10-K/A.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 29, 1999
<PAGE>
1
EXHIBIT 99.7
RAYTHEON SALARIED SAVINGS
AND INVESTMENT PLAN
FINANCIAL STATEMENTS
TO ACCOMPANY 1998 FORM 5500
ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN
UNDER ERISA OF 1974
FOR THE YEAR ENDED DECEMBER 31, 1998
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, the
Plan administrator must file detailed financial information, including the
supplemental schedules, separately with the Department of Labor.
<PAGE>
2
Report of Independent Accountants
To the Participants and Administrator of
the Raytheon Salaried Savings and Investment Plan:
In our opinion, the accompanying statements of net assets available for plan
benefits and the related statement of changes in net assets available for plan
benefits present fairly, in all material respects, the net assets available for
benefits of the Raytheon Salaried Savings and Investment Plan (the "Plan") at
December 31, 1998 and 1997, and the changes in net assets available for benefits
for the year ended December 31, 1998 in conformity with generally accepted
accounting principles. 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 of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
As discussed in Notes A and H to the financial statements, the Board of
Directors of Raytheon Company voted on December 16, 1998, to merge the Plan into
the Raytheon Savings and Investment Plan.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 4, 1999
<PAGE>
3
RAYTHEON SALARIED SAVINGS AND INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
as of December 31, 1998 and 1997
1998 1997
Assets:
Master trust investments:
At contract value (Notes B, E and I) $ 361,616,720 $ 126,113
At fair value (Notes B, F and I) 1,782,619,180 3,228,259
-------------- ----------
2,144,235,900 3,354,372
-------------- ----------
Receivables:
Accrued investment income and
other receivables 1,831,253 8,765
Cash and cash equivalents 43,313,582 24,181
-------------- ----------
Total assets 2,189,380,735 3,387,318
-------------- ----------
Liabilities:
Payable for outstanding purchases 176,984 9,147
Accrued expenses and other payables 407,056 3,010
Transfer payables (Note H) 2,188,796,695
-------------- ----------
Total liabilities 2,189,380,735 12,157
-------------- ----------
Net assets available for plan benefits $ - $3,375,161
============== ==========
The accompanying notes are an integral part of the financial statements.
<PAGE>
4
RAYTHEON SALARIED SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1998
Additions to net assets attributable to:
Investment income (Notes B, E and I):
Net appreciation of investments $ 105,095,438
Interest & Dividends 96,090,429
--------------
201,185,867
Contributions and deferrals:
Employee deferrals 145,632,603
Employer contributions 62,277,760
Transfers (Note G) 1,889,867,093
--------------
2,097,777,456
Total additions 2,298,963,323
--------------
Deductions from net assets attributable to:
Distributions to participants 113,424,315
Administrative expenses 117,473
Transfers (Note G and H) 2,188,796,696
--------------
Total deductions 2,302,338,484
--------------
Decrease in net assets (3,375,161)
Net assets, beginning of year 3,375,161
--------------
Net assets, end of year $ -
==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
5
RAYTHEON SALARIED SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
A. Description of Plan:
General
As more fully described in Note H, the Raytheon Salaried Savings and Investment
Plan (the "Plan") ceased to exist as of December 31, 1998 and effective January
1, 1999 the Plan was merged into the Raytheon Savings and Investment Plan
(RAYSIP). The following description of the Plan provides only general
information that is applicable through December 31, 1998.
The Plan, which was established on December 18, 1997, is a defined contribution
plan covering certain employees of Raytheon Company (the "Company").
Participants should refer to the plan document for a complete description of the
Plan's provisions. Effective December 18, 1997, General Motors Corporation
employees assumed in connection with the merger of the defense business of
Hughes Electronics Corporation with the Company (hereafter referred to as the
"Hughes transaction"), that participated in the Hughes Salaried Employees'
Thrift and Savings Plan, became eligible to participate in the Plan.
Participants had the option to rollover amounts accumulated in plans sponsored
by General Motors Corporation to the Plan. The option to make a rollover
election extended until December 1, 1998. 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 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 combined with the investments of other similar
defined contribution plans of the Company into the Raytheon Company Master Trust
for Defined Contribution Plans ("Master Trust"). The truste of the Master Trust
maintains a separate account reflecting the equitabl 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.
<PAGE>
6
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. For 1998, the annual employee deferral for a participant cannot exceed
$10,000. 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) the Fidelity Equity Income Fund which invests in
shares of a mutual fund consisting primarily of income-producing equity
securities, (c) a Raytheon Common Stock Fund which invests in shares of Raytheon
Company 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) the Fidelity Balanced Fund which invests in shares of a mutual fund
consisting primarily of equity securities, bonds and money market instruments,
(f) the Fidelity Magellan Fund, a growth fund which invests primarily in
equities of companies of all types and sizes, and (g) the Fidelity Blue Chip
Fund, a growth fund which invests primarily in equities of well known and
established companies. Amounts held in the RTN-A Wasting Fund and GMH Wasting
Fund are shares of Raytheon Company Class A common stock or General Motors Class
H common stock, respectively, that were transferred into the Plan as a result of
the Hughes transaction. These options are not open for additional contributions
and will only be available through December 31, 2002.
Dividends and distributions from investments of the Fidelity Equity Income Fund,
the Raytheon Common Stock Fund, the Stock Index Fund, the Fidelity Balanced
Fund, the Fidelity Magellan Fund, the Fidelity Blue Chip Fund, the RTN-A Wasting
Fund and the GHM Wasting 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 occurs upon the earliest of the completion of five
years of service, three years of participation, retirement, death, disability,
or attainment of normal retirement age. Forfeitures of the non-vested portions
of terminated participants' accounts are used to reduce required contributions
of the Company.
<PAGE>
7
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.
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. Contract value approximates 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. Participant loans are valued at cost, which approximates fair value.
Security transactions are recorded on the 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.
<PAGE>
8
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. Investment income
includes both dividend and interest income.
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:
The Internal Revenue Service has determined and informed the Company by letter
dated February 1999 that the Plan, as adopted on December 18, 1997, and related
Trust are designed in accordance with applicable sections of the Code. The Plan
has been amended since applying for the letter. However, the Plan administrator
and the Plan's legal counsel believe that the Plan is currently designed and
being operated in compliance with applicable requirements of the 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>
9
E. Investment Contracts:
The Plan invests in collateralized fixed income investment portfolios which are
managed by insurance companies or investment management firms. 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, 1998:
Banker's Trust (WBS 92-485) 6.85% 6.85%
Metropolitan Life Insurance
Company (GIC GA-12908) 6.58% 6.58%
Metropolitan Life Insurance
Company (GIC GA-13659) 6.10% 6.10%
Prudential Asset Management
Company (GIC 917163-001) 6.75% 6.75%
Connecticut General (GIC 0025174) 5.58% 5.58%
Fidelity IPL (633-GCDC) 5.62% 5.62%
Monumental Life Insurance
Company (GIC BDA00463FR-00) 7.84% 7.84%
For the year ended December 31, 1997:
Banker's 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:
The Plan's trustee is Fidelity Management Trust Company (the "Trustee"). The
Trustee holds the funds for the Plan and is responsible for managing the Plan's
investment assets, executing all investment transactions, recording approved
transactions, and, therefore these transactions qualify as party-in-interest.
In accordance with the provisions of the Plan, the Trustee acts as the Plan's
agent for purchases and sales of shares of Raytheon Company common stock. These
transactions are performed on a Master Trust level. For the Master Trust,
purchases amounted to $288,116,995 and sales amounted to $257,878,566 for the
year ended December 31, 1998.
<PAGE>
10
G. Transfers:
Transfers include transfers of participant accounts, individually and/or in
groups, between the 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 Plan and similar savings plans of
other companies for those participants who changed companies during the year.
During the year, amounts rolled over by former employees of General Motors
Corporation who participated in the Hughes Salaried Employees' Thrift and
Savings Plan and who became eligible to participate in the Plan totaled
$1,600,650,947.
H. Transfer Payables:
As part of an overall effort to minimize plan design differences and increase
administrative efficiencies, the Board of Directors of Raytheon Company voted on
December 16, 1998 to merge the participants and their account balances into the
RAYSIP. The Plan ceased to exist on December 31, 1998 and effective January 1,
1999, the plan provisions of the RAYSIP govern. The transfer payable amount
represents a complete transfer of assets to the RAYSIP.
<PAGE>
11
I. Fund Data:
The following is a summary of net assets available for plan benefits by
fund as of December 31, 1998:
<TABLE>
<CAPTION>
Participant Directed
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:
Master trust investments:
At contract value:
Bankers Trust $127,306,023
Prudential Insurance
Company of America 63,749,776
Metropolitan Life
Insurance Company 160,013,140
Fidelity 6,941,095
Connecticut General 1,758,843
Monumental Life
Insurance Company 1,847,843
At fair value:
Fidelity Equity
Income Fund $651,737,328
Raytheon Company
Common Stock Fund $14,557,666
BT Pyramid Equity
Index Fund $120,795,352
Fidelity Balanced
Fund $278,257,042
Fidelity Magellan
Fund $197,090,660
Fidelity Blue
Chip Fund $127,849,061
Raytheon Class A
Wasting Stock Fund
Raytheon GMH
Wasting Stock Fund
Loans receivable
from participants
------------ ------------ ----------- ------------ ------------ ------------ ------------
Total investments 361,616,720 651,737,328 14,557,666 120,795,352 278,257,042 197,090,660 127,849,061
------------ ------------ ----------- ------------ ------------ ------------ ------------
Receivables:
Accrued investment income
and other receivables 86,463 254,939
Cash and cash equivalents 33,347,560 200,349 539,518
------------ ------------ ----------- ------------ ------------ ------------ ------------
Total assets 394,964,280 651,737,328 14,844,478 121,589,809 278,257,042 197,090,660 127,849,061
------------ ------------ ----------- ------------ ------------ ------------ ------------
Liabilities:
Payable for outstanding
purchases 35,178
Accrued expenses and other
payables 33,749 136,895
Transfer payables 394,964,280 651,737,328 14,775,551 121,452,914 278,257,042 197,090,660 127,849,061
------------ ------------ ----------- ------------ ------------ ------------ ------------
Total liabilities 394,964,280 651,737,328 14,844,478 121,589,809 278,257,042 197,090,660 127,849,061
------------ ------------ ----------- ------------ ------------ ------------ ------------
Net assets available for
plan benefits $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
============ ============ =========== ============ =========== =========== ==========
<PAGE>
12
Participant Directed Non-Participant
Directed
RTN.A GMH Raytheon
Wasting Wasting Loan Common
Fund Fund Fund Stock Fund Total
<S> <C> <C> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust $127,306,023
Prudential Insurance
Company of America 63,749,776
Metropolitan Life
Insurance Company 160,013,140
Fidelity 6,941,095
Connecticut General 1,758,843
Monumental Life
Insurance Company 1,847,843
At fair value:
Fidelity Equity
Income Fund 651,737,328
Raytheon Company
Common Stock Fund $58,683,500 73,241,166
BT Pyramid Equity
Index Fund 120,795,352
Fidelity Balanced
Fund 278,257,042
Fidelity Magellan
Fund 197,090,660
Fidelity Blue
Chip Fund 127,849,061
Raytheon Class A
Wasting Stock Fund $108,893,951 108,893,951
Raytheon GMH
Wasting Stock Fund $162,776,011 162,776,011
Loans receivable
from participants $61,978,609 61,978,609
------------ ------------ ----------- ----------- --------------
Total investments 108,893,951 162,776,011 61,978,609 58,683,500 $2,144,235,900
------------ ------------ ----------- ----------- --------------
Receivables:
Accrued investment income
and other receivables 1,119,046 22,261 348,544 1,831,253
Cash and cash equivalents 3,263,646 5,154,881 807,628 43,313,582
------------ ------------ ----------- ----------- --------------
Total assets 113,276,643 167,953,153 61,978,609 59,839,672 $2,189,380,735
------------ ------------ ------------ ----------- --------------
Liabilities:
Payable for outstanding
purchases 141,806 176,984
Accrued expenses and
other payables 39,112 61,256 136,044 407,056
Transfer payables 113,237,531 167,891,897 61,978,609 59,561,822 2,188,796,695
------------ ------------ ------------ ----------- --------------
Total liabilities 113,276,643 167,953,153 61,978,609 59,839,672 2,189,380,735
------------ ------------ ------------ ----------- --------------
Net assets available for
plan benefits $ 0 $ 0 $ 0 $ 0 $ 0
============ ============ =========== =========== ==============
</TABLE>
<PAGE>
13
I. Fund Data, Continued:
The following is a summary of net assets available for plan benefits by
fund as of December 31, 1997:
<TABLE>
<CAPTION>
Participant Directed
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 $47,101
Prudential Insurance
Company of America 29,215
Metropolitan Life
Insurance Company 49,797
At fair value:
Fidelity Equity Income Fund* $534,021
Raytheon Company Common Stock* $92,888
BT Pyramid Equity Index Fund* $353,515
Fidelity Balanced Fund* $236,387
Fidelity Magellan Fund* $616,257
Fidelity Blue Chip Fund*
-------- -------- ------- -------- -------- --------
Total investments 126,113 534,021 92,888 353,515 236,387 616,257
-------- -------- ------- -------- -------- --------
Receivables:
Accrued investment income
and other receivables 684 846
Cash and cash equivalents 1,239 1,681 3,469
-------- -------- ------- -------- -------- --------
Total assets 127,352 534,021 95,253 357,830 236,387 616,257
------- -------- ------ -------- -------- --------
Liabilities:
Payable for outstanding purchases 790
Accrued expenses and other
payables 184 874
-------- -------- ------- -------- -------- --------
Total liabilities - - 974 874 - -
-------- -------- ------- -------- -------- --------
Net assets available for plan
benefits $127,352 $534,021 $94,279 $356,956 $236,387 $616,257
======== ======== ======= ======== ======== ========
*Represents more than 5% of net assets available for plan benefits
<PAGE>
14
Participant Non-Participant
Directed Directed
Raytheon
Blue Chip Common Stock
Fund Fund Total
<S> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust $ 47,101
Prudential Insurance
Company of America 29,215
Metropolitan Life
Insurance Company 49,797
At fair value:
Fidelity Equity Income Fund* 534,021
Raytheon Company Common Stock* $ 983,125 1,076,013
BT Pyramid Equity Index Fund* 353,515
Fidelity Balanced Fund* 236,387
Fidelity Magellan Fund* 616,257
Fidelity Blue Chip Fund* $412,066 412,066
-------- ---------- ----------
Total investments 412,066 983,125 3,354,372
-------- ---------- ----------
Receivables:
Accrued investment income
and other receivables 7,235 8,765
Cash and cash equivalents 17,792 24,181
-------- ---------- ----------
Total assets 412,066 1,008,152 3,387,318
-------- ---------- ----------
Liabilities:
Payable for outstanding purchases 8,357 9,147
Accrued expenses and other
payables 1,952 3,010
-------- ---------- ----------
Total liabilities - 10,309 12,157
-------- ---------- ----------
Net assets available for plan
benefits $412,066 $997,843 $3,375,161
======== ======== ==========
*Represents more than 5% of net assets available for plan benefits
</TABLE>
<PAGE>
15
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, 1998:
<TABLE>
<CAPTION>
Participant Directed
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>
Additions to net assets
attributable to:
Investment income:
Net appreciation
(depreciation) of
investments $ 14,612 $ 4,027,587 $ 172,647 $ 11,213,233 $ 5,237,269 $ 30,942,356 $ 12,147,296
Interest & Dividends 17,386,177 38,542,830 27,342,164 5,686,772 4,023,655
----------- ------------ ----------- ------------ ------------ ------------ ------------
17,400,789 42,570,417 172,647 11,213,233 32,579,433 36,629,128 16,170,951
----------- ------------ ----------- ------------ ------------ ------------ ------------
Contributions and deferrals:
Employee deferrals 8,515,762 32,008,106 5,907,352 22,808,656 14,594,485 36,210,972 25,587,270
Employer contributions
Transfers 361,302,774 766,124,647 1,672,702 37,465,894 278,383,055 67,931,458 25,984,279
------------ ------------ ----------- ----------- ------------ ------------ ------------
369,818,536 798,132,753 7,580,054 60,274,550 292,977,540 104,142,430 51,571,549
------------ ------------ ----------- ----------- ------------ ------------ ------------
Total additions 387,219,325 840,703,170 7,752,701 71,487,783 325,556,973 140,771,558 67,742,500
------------ ------------ ----------- ----------- ------------ ------------ ------------
Deductions from net assets
attributable to:
Distributions to
participants 23,020,443 39,602,569 421,273 4,795,113 15,326,570 7,096,289 4,276,242
Administrative expenses 18,237 41,185 355 2,804 15,918 4,294 2,901
Transfers (106)
Transfers plan mergers 394,964,281 651,737,327 14,775,551 121,452,914 278,257,042 197,090,659 127,849,060
------------ ------------ ----------- ------------ ------------ ------------ ------------
Total deductions 418,002,961 691,381,081 15,197,073 126,250,831 293,599,530 204,191,242 132,128,203
------------ ------------ ----------- ------------ ------------ ------------ ------------
Interfund transfers 30,656,284 (149,856,110) 7,350,093 54,406,092 (32,193,830) 62,803,427 63,973,637
------------ ------------ ----------- ------------ ------------ ------------ ------------
Decrease in net assets (127,352) (534,021) (94,279) (356,956) (236,387) (616,257) (412,066)
Net assets, beginning
of year 127,352 534,021 94,279 356,956 236,387 616,257 412,066
------------ ------------ ----------- ----------- ------------ ------------ ------------
Net assets, end of year $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
============ ============ =========== =========== ============ ============ ============
<PAGE>
16
Participant Non-Participant
Directed Directed
RTN.A GMH Raytheon
Wasting Wasting Loan Common
Fund Fund Fund Stock Fund Total
<S> <C> <C> <C> <C> <C>
Additions to net assets
attributable to:
Investment income:
Net appreciation
(depreciation)of
investments $ (94,427) $ 41,881,477 $ (446,612) $ 105,095,438
Interest & Dividends $ 3,108,811 20 96,090,429
---------- ------------ ----------- ----------- --------------
(94,427) 41,881,477 3,108,811 (446,592) 201,185,867
---------- ------------ ----------- ----------- --------------
Contributions and deferrals:
Employee deferrals 145,632,603
Employer contributions 62,277,760 62,277,760
Transfers 141,098,893 160,233,523 49,546,119 123,749 1,889,867,093
------------ ------------ ----------- ----------- --------------
141,098,893 160,233,523 49,546,119 62,401,509 2,097,777,456
----------- ------------ ----------- ----------- --------------
Total additions 141,004,466 202,115,000 52,654,930 61,954,917 2,298,963,323
------------ ------------ ----------- ----------- --------------
Deductions from net assets
attributable to:
Distributions to
participants 6,597,009 10,194,189 663,703 1,430,915 113,424,315
Administrative expenses 11,411 18,815 1,553 117,473
Transfers 106
Transfers plan mergers 113,237,533 167,891,898 61,978,609 59,561,822 2,188,796,696
------------ ------------ ----------- ----------- --------------
Total deductions 119,845,953 178,104,902 62,642,312 60,994,396 2,302,338,484
------------ ------------ ----------- ----------- --------------
Interfund transfers (21,158,513) (24,010,098) 9,987,382 (1,958,364) -
------------ ------------ ----------- ----------- --------------
Decrease in net assets - - - (997,843) (3,375,161)
Net assets, beginning
of year 997,843 3,375,161
------------ ------------ ----------- ----------- ---------------
Net assets, end of year $ 0 $ 0 $ 0 $ 0 $ 0
============ ============ =========== =========== ===============
</TABLE>
<PAGE>
17
J. Master Trust:
All plan investments are included under the Master Trust. At December 31,
1998, assets of the Plan represented 0% of the total assets under the Master
Trust. This has decreased from .10% at December 31, 1997.
The following is a summary of net assets available for plan benefits by
fund under the Master Trust as of December 31, 1998:
<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* $ 473,258,791
Prudential Life Insurance
Company of America 236,989,116
Metropolitan Life
Insurance Company* 594,847,154
Fidelity 25,803,449
Connecticut General 6,538,482
Monumental Life Insurance
Company 6,869,338
At fair value:
Fidelity Equity Income
Fund* $1,464,615,296
Raytheon Company Common
Stock Fund* $ 799,542,751
BT Pyramid Equity
Index Fund* $ 745,602,791
Fidelity Balanced Fund* $ 442,796,289
Fidelity Magellan Fund* $ 379,680,454
Fidelity Blue Chip Fund*
Templeton Foreign I Fund
Fidelity Investment Grade
Bond Fund
Fidelity Retirement
Money Market
Vanguard Winsor
Vanguard Wellesley
TRP Small Cap Stock
Raytheon Class A Wasting
Stock Fund
Raytheon GMH Wasting
Stock Fund
Loans receivable from
participants
-------------- -------------- -------------- -------------- -------------- --------------
Total investments 1,344,306,330 1,464,615,296 799,542,751 745,602,791 442,796,289 379,680,454
-------------- -------------- -------------- -------------- -------------- --------------
Receivables:
Employer contribution
Accrued investment income
and other receivables 4,748,948 1,573,604
Transfer receivables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803
Cash and cash equivalents 123,969,201 11,004,025 3,330,147
-------------- -------------- -------------- -------------- -------------- --------------
Total assets 2,048,537,201 2,226,757,712 1,255,380,751 967,248,229 755,173,618 616,369,257
-------------- -------------- -------------- -------------- -------------- --------------
Liabilities:
Payable for outstanding
purchases 1,932,125
Accrued expenses and
other payables 1,853,618 844,977
Transfer payables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803
-------------- -------------- -------------- -------------- -------------- --------------
Total liabilities 580,261,670 762,142,416 443,870,770 217,586,664 312,377,329 236,688,803
-------------- -------------- -------------- -------------- -------------- --------------
Net assets available for
plan benefits $1,468,275,531 $1,464,615,296 $ 811,509,981 $ 749,661,565 $ 442,796,289 $ 379,680,454
============== ============== ============== ============== ============== ==============
<PAGE>
18
Templeton Investment Retirement Vanguard Vanguard
Blue Chip Foreign I Grade Money Winsor Wellesley
Fund Fund Bond Fund Market Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust*
Prudential Life Insurance
Company of America
Metropolitan Life
Insurance Company*
Fidelity
Connecticut General
Monumental Life Insurance
Company
At fair value:
Fidelity Equity Income
Fund*
Raytheon Company Common
Stock Fund*
BT Pyramid Equity
Index Fund*
Fidelity Balanced Fund*
Fidelity Magellan Fund*
Fidelity Blue Chip Fund* $ 391,787,509
Templeton Foreign I Fund $ 6,966,704
Fidelity Investment Grade
Bond Fund $ -
Fidelity Retirement
Money Market $ 13,202,524
Vanguard Winsor $ 41
Vanguard Wellesley $ 18
TRP Small Cap Stock
Raytheon Class A Wasting
Stock Fund
Raytheon GMH Wasting
Stock Fund
Loans receivable from
participants
-------------- -------------- -------------- ------------- ------------- --------------
Total investments 391,787,509 $ 6,966,704 - 13,202,524 41 18
-------------- -------------- -------------- ------------- ------------- --------------
Receivables:
Employer contribution 3,595,261
Accrued investment income
and other receivables
Transfer receivables 191,269,141 6,966,652 16,715,590
Cash and cash equivalents
-------------- -------------- -------------- ------------- ------------- --------------
Total assets 583,056,650 13,933,356 - 33,513,375 41 18
-------------- -------------- -------------- ------------- ------------- --------------
Liabilities:
Payable for outstanding
purchases
Accrued expenses and
other payables
Transfer payables 191,269,141 6,966,652 16,715,590
-------------- -------------- -------------- ------------- ------------- --------------
Total liabilities 191,269,141 6,966,652 - 16,715,590 - -
-------------- -------------- -------------- ------------- ------------- --------------
Net assets available for
plan benefits $ 391,787,509 $ 6,966,704 $ - $ 16,797,785 $ 41 $ 18
============== ============== ============== ============== ============== ==============
<PAGE>
19
TRP Small RTN.A GMH
Cap Stock Wasting Wasting Loan
Fund Fund Fund Fund Other(1) Total
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $ 473,258,791
Prudential Life Insurance
Company of America 236,989,116
Metropolitan Life
Insurance Company* 594,847,154
Fidelity 25,803,449
Connecticut General 6,538,482
Monumental Life Insurance
Company 6,869,338
At fair value:
Fidelity Equity Income
Fund* 1,464,615,296
Raytheon Company Common
Stock Fund* 799,542,751
BT Pyramid Equity
Index Fund* 745,602,791
Fidelity Balanced Fund* 442,796,289
Fidelity Magellan Fund* 379,680,454
Fidelity Blue Chip Fund* 391,787,509
Templeton Foreign I Fund 6,966,704
Fidelity Investment Grade
Bond Fund -
Fidelity Retirement
Money Market 13,202,524
Vanguard Winsor 41
Vanguard Wellesley 18
TRP Small Cap Stock $ 348 348
Raytheon Class A Wasting
Stock Fund $ 116,129,149 116,129,149
Raytheon GMH Wasting
Stock Fund $ 172,859,819 172,859,819
Loans receivable from
participants $ 250,687,865 250,687,865
-------------- -------------- -------------- -------------- ------------- --------------
Total investments 348 116,129,149 172,859,819 250,687,865 - 6,128,177,888
-------------- -------------- -------------- -------------- ------------- --------------
Receivables:
Employer contribution 3,595,261
Accrued investment income
and other receivables 1,193,397 23,640 7,539,589
Transfer receivables 120,761,325 178,295,618 117,046,618 $ 855,826,675 4,035,178,551
Cash and cash equivalents 3,480,490 5,474,220 147,258,083
-------------- -------------- -------------- ------------- -------------- --------------
Total assets 348 241,564,361 356,653,297 367,734,483 855,826,675 10,321,749,372
-------------- -------------- -------------- ------------- -------------- --------------
Liabilities:
Payable for outstanding
purchases 1,932,125
Accrued expenses and
other payables 41,711 62,061 2,802,367
Transfer payables 120,761,325 178,295,618 117,046,618 3,179,351,876
-------------- -------------- -------------- ------------- -------------- --------------
Total liabilities - 120,803,036 178,357,679 117,046,618 - 3,184,086,368
-------------- -------------- -------------- ------------- -------------- --------------
Net assets available for
plan benefits $ 348 $120,761,325 $ 178,295,618 $ 250,687,865 $ 855,826,675 $7,137,663,004
============== ============== ============== ============== ============== ==============
Percentage of Master Trust that are Plan assets - 0.00%
*Represent more than 5% of net assets available for plan benefits
(1) Other represents Raytheon plans merging in from outside the Master Trust.
Note: Not all funds within the Master Trust are available options to
participants in the Plan.
</TABLE>
<PAGE>
20
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, 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:
Investments:
At contract value:
Bankers Trust* $351,035,073
Prudential Life 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 Fund* $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
============ ============ ============ ============ ============ ===========
<PAGE>
21
Templeton Investment Retirement
Blue Chip Foreign I Grade Money Loan
Fund Fund Bond Fund Market Fund Fund Total
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $351,035,073
Prudential Life 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 Fund* 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 - 0.10%
*Represent more than 5% of net assets available for plan benefits
Note: Not all funds within the Master Trust are available options to
participants in the Plan.
</TABLE>
<PAGE>
22
J. Master Trust, Continued:
The following is a summary of investment income by fund under the Master Trust
for the year ended December 31, 1998:
<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>
Investment income:
Net appreciation
(depreciation) of assets $ 30,695 $ 49,019,748 $74,202,083 $149,571,006 $16,091,158 $62,195,801
Interest & Dividends 81,886,632 86,279,682 1,792 42,537,357 13,255,763
----------- ------------ ----------- ------------ ----------- -----------
Total investment
income/(loss) $81,917,327 $135,299,430 $74,203,875 $149,571,006 $58,628,515 $75,451,564
=========== ============ =========== ============ =========== ===========
<PAGE>
23
Templeton Investment Retirement Vanguard Vanguard
Blue Chip Foreign I Grade Money Winsor Wellesley
Fund Fund Bond Fund Market Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Net appreciation
(depreciation) of assets $60,264,181 $(1,095,980) $ 17,635 $2,864,378 $1,379,950
Interest & Dividends 13,550,491 752,610 162,858 $ 349,740
----------- ----------- -------- ---------- ---------- ----------
Total investment
income/(loss) $73,814,672 $ (343,370) $180,493 $ 349,740 $2,864,378 $1,379,950
=========== =========== ======== ========== ========== ==========
<PAGE>
24
TRP Small RTN.A GMH
Cap Stock Wasting Wasting Loan
Fund Fund Fund Fund Total
<S> <C> <C> <C> <C> <C>
Investment income:
Net appreciation
(depreciation) of assets $ 15 $ (35,268) $44,604,025 $459,109,427
Interest & Dividends $15,334,403 254,111,328
----------- ---------- ----------- ----------- ------------
Total investment
income/(loss) $ 15 $ (35,268) $44,604,025 $15,334,403 $713,220,755
=========== ========== =========== =========== ============
</TABLE>
<PAGE>
1
EXHIBIT 99.7a
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (File No. 333-56117) of Raytheon Company of our report
dated June 4, 1999 relating to the financial statements of the Raytheon
Salaried Savings and Investment Plan, which appears in this Form 10-K/A.
PricewaterhouseCoopers
Boston, Massachusetts
June 29, 1999
<PAGE>
1
EXHIBIT 99.8
RAYTHEON CALIFORNIA HOURLY SAVINGS AND INVESTMENT PLAN
FINANCIAL STATEMENTS
TO ACCOMPANY 1998 FORM 5500
ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN
UNDER ERISA OF 1974
FOR THE YEAR ENDED DECEMBER 31, 1998
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, the
Plan administrator must file detailed financial information, including the
supplemental schedules, separately with the Department of Labor.
<PAGE>
2
Report of Independent Accountants
To the Participants and Administrator of
the Raytheon California Hourly Savings and Investment Plan:
In our opinion, the accompanying statements of net assets available for plan
benefits and the related statement of changes in net assets available for plan
benefits present fairly, in all material respects, the net assets available for
benefits of the Raytheon California Hourly Savings and Investment Plan (the
"Plan") at December 31, 1998 and 1997, and the changes in net assets available
for benefits for the year ended December 31, 1998 in conformity with generally
accepted accounting principles. 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 of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
As discussed in Notes A and H to the financial statements, the Board of
Directors of Raytheon Company voted on December 16, 1998, to merge the Plan into
the Raytheon Savings and Investment Plan.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 4, 1999
<PAGE>
3
RAYTHEON CALIFORNIA HOURLY SAVINGS AND INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
as of December 31, 1998 and 1997
1998 1997
Assets:
Master trust investments:
At contract value (Notes B, E and I) $13,156,095 $ 9,712
At fair value (Notes B, F and I) 45,166,735 123,623
----------- --------
58,322,830 133,335
----------- --------
Receivables:
Accrued investment income
and other receivables 46,484 367
Cash and cash equivalents 1,462,127 1,025
----------- --------
Total assets 59,831,441 134,727
----------- --------
Liabilities:
Payable for outstanding purchases 5,897 405
Accrued expenses and other payables 6,633 112
Transfer payables (Note H) 59,818,911
----------- --------
Total liabilities 59,831,441 517
----------- --------
Net assets available for plan benefits $ - $134,210
=========== ========
The accompanying notes are an integral part of the financial statements.
<PAGE>
4
RAYTHEON CALIFORNIA HOURLY SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1998
Additions to net assets attributable to:
Investment income (Notes B, E and I):
Net appreciation of investments $ 2,660,598
Interest & Dividends 2,695,417
-----------
5,356,015
Contributions and deferrals:
Employee deferrals 4,746,859
Employer contributions 2,251,640
Transfers (Note G) 53,863,009
-----------
60,861,508
Total additions 66,217,523
-----------
Deductions from net assets attributable to:
Distributions to participants 6,300,175
Administrative expenses 6,092
Transfers (Note G and H) 60,045,466
-----------
Total deductions 66,351,733
-----------
Decrease in net assets (134,210)
Net assets, beginning of year 134,210
-----------
Net assets, end of year $ 0
===========
The accompanying notes are an integral part of the financial statements.
<PAGE>
5
RAYTHEON CALIFORNIA HOURLY SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
A. Description of Plan:
General
As more fully described in Note H, the Raytheon California Hourly Savings and
Investment Plan (the "Plan") ceased to exist as of December 31, 1998 and
effective January 1, 1999, the Plan was merged into the Raytheon Savings and
Investment Plan (RAYSIP). The following description of the Plan provides only
general information that is applicable through December 31, 1998. Participants
should refer to the plan document for a complete description of the Plan's
provisions.
The Plan, which was established on December 18, 1997, is a defined contribution
plan covering certain employees of Raytheon Company (the "Company"). Effective
December 18, 1997, General Motors Corporation employees assumed in connection
with the merger of the defense business of Hughes Electronics Corporation with
the Company (hereafter referred to as the "Hughes transaction"), that
participated in the Hughes California Hourly Employees' Thrift and Savings Plan,
became eligible to participate in the Plan. Participants had the option to
rollover amounts accumulated in plans sponsored by General Motors Corporation to
the Plan. The option to make a rollover election extended until December 1,
1998. 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 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 combined with the investments of other similar
defined contribution plans of Raytheon Company into the Raytheon Company Master
Trust for Defined Contribution Plans ("Master Trust"). 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>
6
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. For 1998, the annual employee deferral for a participant cannot exceed
$10,000. 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) the Fidelity Equity Income Fund which invests in
shares of a mutual fund consisting primarily of income-producing equity
securities, (c) a Raytheon Common Stock Fund which invests in shares of Raytheon
Company 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) the Fidelity Balanced Fund which invests in shares of a mutual fund
consisting primarily of equity securities, bonds and money market instruments,
(f) the Fidelity Magellan Fund, a growth fund which invests primarily in
equities of companies of all types and sizes, and (g) the Fidelity Blue Chip
Fund, a growth fund which invests primarily in equities of well known and
established companies. Amounts held in the RTN-A Wasting Fund and GMH Wasting
Fund are shares of Raytheon Company Class A common stock or General Motors Class
H common stock, respectively, that were transferred into the Plan as a result of
the Hughes transaction. These options are not open for additional contributions
and will only be available through December 31, 2002.
Dividends and distributions from investments of the Fidelity Equity Income Fund,
the Raytheon Common Stock Fund, the Stock Index Fund, the Fidelity Balanced
Fund, the Fidelity Magellan Fund, the Fidelity Blue Chip Fund, the RTN-A Wasting
Fund and the GHM Wasting 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 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.
<PAGE>
7
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.
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. Contract value approximates 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. Participant loans are valued at cost, which approximates fair value.
<PAGE>
8
Security transactions are recorded on the 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. Investment income
includes both dividend and interest income.
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:
The Internal Revenue Service has determined and informed the Company by letter
dated February 1999 that the Plan, as adopted on December 18, 1997, and related
Trust are designed in accordance with applicable sections of the Code. The Plan
has been amended since applying for 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 applicable requirements of the
Code. Therefore, no provision for income taxes has been included in the Plan's
financial statements.
<PAGE>
9
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 which are
managed by insurance companies and investment management firms. 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, 1998:
Banker's Trust (WBS 92-485) 6.85% 6.85%
Metropolitan Life Insurance
Company (GIC GA-12908) 6.58% 6.58
Metropolitan Life Insurance
Company (GIC GA-13659) 6.10% 6.10%
Prudential Asset Management
Company (GIC 917163-001) 6.75% 6.75%
Connecticut General (GIC 0025174) 5.58% 5.58%
Fidelity IPL (633-GCDC) 5.62% 5.62%
Monumental Life Insurance
Company (GIC BDA00463FR-00) 7.84% 7.84%
For the year ended December 31, 1997:
Banker's 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:
The Plan's trustee is Fidelity Management Trust Company (the "Trustee"). The
Trustee holds the funds for the Plan and is responsible for managing the Plan's
investment assets, executing all investment transactions, recording approved
transactions, and, therefore these transactions qualify as party-in-interest.
In accordance with the provisions of the Plan, the Trustee acts as the Plan's
agent for purchases and sales of shares of Raytheon Company common stock. These
transactions are performed on a Master Trust level. For the Master Trust,
purchases amounted to $288,116,995 and sales amounted to $257,878,566 for the
year ended December 31, 1998.
<PAGE>
10
G. Transfers:
Transfers include transfers of participant accounts, individually and/or in
groups, between the 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 Plan and similar savings plans of
other companies for those participants who changed companies during the year.
During the year, amounts rolled over by former employees of General Motors
Corporation who participated in the Hughes California Hourly Employees' Thrift
and Savings Plan and who became eligible to participate in the Plan totaled
$42,657,803.
H. Transfer Payables:
As part of an overall effort to minimize plan design differences and increase
administrative efficiencies, the Board of Directors of Raytheon Company voted on
December 16, 1998 to merge the participants and their account balances into the
RAYSIP. The Plan ceased to exist on December 31, 1998 and effective January 1,
1999 the plan provisions of the RAYSIP govern. The transfer payable amount
represents a complete transfer of assets to the RAYSIP.
<PAGE>
11
I. Fund Data:
The following is a summary of net assets available for plan benefits by
fund as of December 31, 1998:
<TABLE>
<CAPTION>
Participant Directed
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:
Master trust investments:
At contract value:
Bankers Trust $4,631,562
Prudential Insurance
Company of America 2,319,301
Metropolitan Life
Insurance Company 5,821,490
Fidelity 252,526
Connecticut General 63,989
Monumental Life
Insurance Company 67,227
At fair value:
Fidelity Equity
Income Fund $17,602,036
Raytheon Company
Common Stock Fund $606,765
BT Pyramid Equity
Index Fund $1,294,913
Fidelity Balanced
Fund $5,784,869
Fidelity Magellan
Fund $3,839,079
Fidelity Blue
Chip Fund $3,778,025
Raytheon Class A
Wasting Stock Fund
Raytheon GMH
Wasting Stock Fund
Loans receivable
from participants
----------- ----------- -------- ---------- ---------- ---------- ----------
Total investments 13,156,095 17,602,036 606,765 1,294,913 5,784,869 3,839,079 3,778,025
----------- ----------- -------- ---------- ---------- ---------- ----------
Receivables:
Accrued investment income
and other receivables 3,604 2,733
Cash and cash equivalents 1,213,229 8,351 5,784
----------- ----------- -------- ---------- ---------- ---------- ----------
Total assets 14,369,324 17,602,036 618,720 1,303,430 5,784,869 3,839,079 3,778,025
----------- ----------- -------- ---------- ---------- ---------- ----------
Liabilities:
Payable for outstanding
purchases 1,466
Accrued expenses and other
payables 1,407 1,467
Transfer payables 14,369,324 17,602,036 615,847 1,301,963 5,784,869 3,839,079 3,778,025
----------- ----------- -------- ---------- ---------- ---------- ----------
Total liabilities 14,369,324 17,602,036 618,720 1,303,430 5,784,869 3,839,079 3,778,025
----------- ----------- -------- ----------- ---------- ---------- ----------
Net assets available for
plan benefits $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
=========== =========== ======== ========== ========== ========== ==========
<PAGE>
12
Participant Directed Non-Participant
Directed
RTN.A GMH Raytheon
Wasting Wasting Loan Common
Fund Fund Fund Stock Fund Total
<S> <C> <C> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust $ 4,631,562
Prudential Insurance
Company of America 2,319,301
Metropolitan Life
Insurance Company 5,821,490
Fidelity 252,526
Connecticut General 63,989
Monumental Life
Insurance Company 67,227
At fair value:
Fidelity Equity
Income Fund 17,602,036
Raytheon Company
Common Stock Fund $1,833,397 2,440,162
BT Pyramid Equity
Index Fund 1,294,913
Fidelity Balanced
Fund 5,784,869
Fidelity Magellan
Fund 3,839,079
Fidelity Blue
Chip Fund 3,778,025
Raytheon Class A
Wasting Stock Fund $2,794,160 2,794,160
Raytheon GMH
Wasting Stock Fund $3,972,028 3,972,028
Loans receivable
from participants $3,661,463 3,661,463
---------- ---------- ---------- ---------- -----------
Total investments 2,794,160 3,972,028 3,661,463 1,833,397 58,322,830
---------- ---------- ---------- ---------- -----------
Receivables:
Accrued investment income
and other receivables 28,714 543 10,890 46,484
Cash and cash equivalents 83,743 125,788 25,232 1,462,127
---------- ---------- ---------- ---------- -----------
Total assets 2,906,617 4,098,359 3,661,463 1,869,519 59,831,441
---------- ---------- ---------- ---------- -----------
Liabilities:
Payable for outstanding
purchases 4,431 5,897
Accrued expenses and
other payables 1,004 (1,495) 4,250 6,633
Transfer payables 2,905,613 4,099,854 3,661,463 1,860,838 59,818,911
---------- ---------- ---------- ---------- -----------
Total liabilities 2,906,617 4,098,359 3,661,463 1,869,519 59,831,441
---------- ---------- ---------- ---------- -----------
Net assets available for
plan benefits $ 0 $ 0 $ 0 $ 0 $ 0
========== ========== ========== ========== ===========
</TABLE>
<PAGE>
13
I. Fund Data, Continued:
The following is a summary of net assets available for plan benefits by
fund as of December 31, 1997:
<TABLE>
<CAPTION>
Participant Directed
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 $3,627
Prudential Insurance
Company of America 2,250
Metropolitan Life
Insurance Company 3,835
At fair value:
Fidelity Equity Income Fund* $21,159
Raytheon Company Common Stock Fund* $6,484
BT Pyramid Equity Index Fund* $6,823
Fidelity Balanced Fund* $9,931
Fidelity Magellan Fund* $23,519
Fidelity Blue Chip Fund*
------ -------- ------ ------ ------ -------
Total investments 9,712 21,159 6,484 6,823 9,931 23,519
------ -------- ------ ------ ------ -------
Receivables:
Accrued investment income
and other receivables 48 16
Cash and cash equivalents 95 117 67
------ ------- ------ ------ ------ -------
Total assets 9,807 21,159 6,649 6,906 9,931 23,519
------ ------- ------ ------ ------ -------
Liabilities:
Payable for outstanding purchases 55
Accrued expenses and other
payables 13 17
------ ------- ------ ------ ------ ------
Total liabilities - - 68 17 - -
------ ------- ------ ------ ------ ------
Net assets available for plan
benefits $9,807 $21,159 $6,581 $6,889 $9,931 $23,519
====== ======= ====== ====== ====== =======
*Represents more than 5% of net assets available for plan benefits
<PAGE>
14
Participant Non-Participant
Directed Directed
Raytheon
Blue Chip Common Stock
Fund Fund Total
<S> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust $ 3,627
Prudential Insurance
Company of America 2,250
Metropolitan Life
Insurance Company 3,835
At fair value:
Fidelity Equity Income Fund* 21,159
Raytheon Company Common Stock Fund* $41,198 47,682
BT Pyramid Equity Index Fund* 6,823
Fidelity Balanced Fund* 9,931
Fidelity Magellan Fund* 23,519
Fidelity Blue Chip Fund* $14,509 14,509
------- ------- --------
Total investments 14,509 41,198 133,335
------- ------- --------
Receivables:
Accrued investment income
and other receivables 303 367
Cash and cash equivalents 746 1,025
------- ------- --------
Total assets 14,509 42,247 134,727
------- ------- --------
Liabilities:
Payable for outstanding purchases 350 405
Accrued expenses and other
payables 82 112
------- ------ --------
Total liabilities - 432 517
------- ------ --------
Net assets available for plan
benefits $14,509 $41,815 $134,210
======= ======= ========
*Represents more than 5% of net assets available for plan benefits.
</TABLE>
<PAGE>
15
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, 1998:
<TABLE>
<CAPTION>
Participant Directed
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>
Additions to net assets
attributable to:
Investment income:
Net appreciation
(depreciation) of
investments $ 487 $ 279,100 $ 2,444 $ 155,645 $ 211,808 $ 518,691 $ 411,361
Interest & Dividends 685,891 1,070,260 527,332 119,117 94,767
---------- ---------- -------- ---------- ---------- ---------- ----------
686,378 1,349,360 2,444 155,645 739,140 637,808 506,128
---------- ---------- -------- ---------- ---------- ---------- ----------
Contributions and deferrals:
Employee deferrals 636,436 1,171,220 359,135 372,864 545,647 982,845 678,712
Employer contributions
Transfers 13,971,622 20,431,686 190,254 409,087 5,181,006 1,309,105 915,486
----------- ---------- -------- ---------- ---------- ---------- ----------
14,608,058 21,602,906 549,389 781,951 5,726,653 2,291,950 1,594,198
----------- ---------- -------- ---------- ---------- ---------- ----------
Total additions 15,294,436 22,952,266 551,833 937,596 6,465,793 2,929,758 2,100,326
----------- ---------- -------- ---------- ---------- ---------- ----------
Deductions from net assets
attributable to:
Distributions to
participants 1,741,442 1,891,513 40,616 120,674 581,216 288,342 156,975
Administrative expenses 1,513 1,903 30 42 583 137 120
Transfers 10,341
Transfers plan mergers 14,369,324 17,602,036 615,847 1,301,963 5,784,869 3,839,079 3,778,025
----------- ---------- -------- ---------- ---------- ---------- ----------
Total deductions 16,112,279 19,495,452 666,834 1,422,679 6,366,668 4,127,558 3,935,120
----------- ---------- -------- ---------- ---------- ---------- ----------
Interfund transfers 808,036 (3,477,973) 108,420 478,194 (109,056) 1,174,281 1,820,285
---------- ---------- -------- ---------- ---------- ---------- ----------
Decrease in net assets (9,807) (21,159) (6,581) (6,889) (9,931) (23,519) (14,509)
Net assets, beginning
of year 9,807 21,159 6,581 6,889 9,931 23,519 14,509
---------- ---------- -------- ---------- ---------- ---------- ----------
Net assets, end of year $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
========== ========== ======== ========== ========== ========== ==========
<PAGE>
16
Participant Directed Non-Participant
Directed
RTN.A GMH Raytheon
Wasting Wasting Loan Common
Fund Fund Fund Stock Fund Total
<S> <C> <C> <C> <C> <C>
Additions to net assets
attributable to:
Investment income:
Net appreciation
(depreciation) of
investments $ 45,904 $ 1,049,401 $ (14,243) $ 2,660,598
Interest & Dividends $ 198,050 2,695,417
---------- ----------- ---------- ---------- -----------
45,904 1,049,401 198,050 (14,243) 5,356,015
---------- ----------- ---------- ---------- -----------
Contributions and deferrals:
Employee deferrals 4,746,859
Employer contributions 2,251,640 2,251,640
Transfers 3,913,209 4,542,582 2,998,972 53,863,009
---------- ---------- ---------- ---------- -----------
3,913,209 4,542,582 2,998,972 2,251,640 60,861,508
---------- ---------- ---------- ---------- -----------
Total additions 3,959,113 5,591,983 3,197,022 2,237,397 66,217,523
---------- ---------- ---------- ---------- -----------
Deductions from net assets
attributable to:
Distributions to
participants 433,298 628,930 222,868 194,301 6,300,175
Administrative expenses 646 1,063 55 6,092
Transfers 45,461 58,878 111,875 226,555
Transfers plan mergers 2,905,613 4,099,854 3,661,463 1,860,838 59,818,911
---------- ---------- ---------- ---------- -----------
Total deductions 3,385,018 4,788,725 3,884,331 2,167,069 66,351,733
---------- ---------- ---------- ---------- -----------
Interfund transfers (574,095) (803,258) 687,309 (112,143) -
---------- ---------- ---------- ---------- -----------
Decrease in net assets - - - (41,815) (134,210)
Net assets, beginning
of year - - - 41,815 134,210
---------- ---------- ---------- ---------- -----------
Net assets, end of year $ 0 $ 0 $ 0 $ 0 $ 0
========== ========== ========== ========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION> 17
J. Master Trust:
All plan investments are included under the Master Trust. At December 31,
1998, assets of the Plan represented 0% of the total assets under the Master
Trust. This has decreased from .004% at December 31, 1997.
The following is a summary of net assets available for plan benefits by
fund under the Master Trust as of December 31, 1998:
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* $ 473,258,791
Prudential Life Insurance
Company of America 236,989,116
Metropolitan Life
Insurance Company* 594,847,154
Fidelity 25,803,449
Connecticut General 6,538,482
Monumental Life Insurance
Company 6,869,338
At fair value:
Fidelity Equity Income
Fund* $1,464,615,296
Raytheon Company Common
Stock Fund* $ 799,542,751
BT Pyramid Equity
Index Fund* $ 745,602,791
Fidelity Balanced Fund* $ 442,796,289
Fidelity Magellan Fund* $ 379,680,454
Fidelity Blue Chip Fund*
Templeton Foreign I Fund
Fidelity Investment Grade
Bond Fund
Fidelity Retirement
Money Market
Vanguard Winsor
Vanguard Wellesley
TRP Small Cap Stock
Raytheon Class A Wasting
Stock Fund
Raytheon GMH Wasting
Stock Fund
Loans receivable from
participants
-------------- -------------- -------------- -------------- -------------- --------------
Total investments 1,344,306,330 1,464,615,296 799,542,751 745,602,791 442,796,289 379,680,454
-------------- -------------- -------------- -------------- -------------- --------------
Receivables:
Employer contribution
Accrued investment income
and other receivables 4,748,948 1,573,604
Transfer receivables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803
Cash and cash equivalents 123,969,201 11,004,025 3,330,147
-------------- -------------- -------------- -------------- -------------- --------------
Total assets 2,048,537,201 2,226,757,712 1,255,380,751 967,248,229 755,173,618 616,369,257
-------------- -------------- -------------- -------------- -------------- --------------
Liabilities:
Payable for outstanding
purchases 1,932,125
Accrued expenses and
other payables 1,853,618 844,977
Transfer payables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803
-------------- -------------- -------------- -------------- -------------- --------------
Total liabilities 580,261,670 762,142,416 443,870,770 217,586,664 312,377,329 236,688,803
-------------- -------------- -------------- -------------- -------------- --------------
Net assets available for
plan benefits $1,468,275,531 $1,464,615,296 $ 811,509,981 $ 749,661,565 $ 442,796,289 $ 379,680,454
============== ============== ============== ============== ============== ==============
<PAGE>
18
Templeton Investment Retirement Vanguard Vanguard
Blue Chip Foreign I Grade Money Winsor Wellesley
Fund Fund Bond Fund Market Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust*
Prudential Life Insurance
Company of America
Metropolitan Life
Insurance Company*
Fidelity
Connecticut General
Monumental Life Insurance
Company
At fair value:
Fidelity Equity Income
Fund*
Raytheon Company Common
Stock Fund*
BT Pyramid Equity
Index Fund*
Fidelity Balanced Fund*
Fidelity Magellan Fund*
Fidelity Blue Chip Fund* $ 391,787,509
Templeton Foreign I Fund $ 6,966,704
Fidelity Investment Grade
Bond Fund $ -
Fidelity Retirement
Money Market $ 13,202,524
Vanguard Winsor $ 41
Vanguard Wellesley $ 18
TRP Small Cap Stock
Raytheon Class A Wasting
Stock Fund
Raytheon GMH Wasting
Stock Fund
Loans receivable from
participants
-------------- -------------- -------------- ------------- ------------- --------------
Total investments 391,787,509 6,966,704 - 13,202,524 41 18
Receivables:
Employer contribution 3,595,261
Accrued investment income
and other receivables
Transfer receivables 191,269,141 6,966,652 16,715,590
Cash and cash equivalents
-------------- -------------- -------------- ------------- ------------- --------------
Total assets 583,056,650 13,933,356 - 33,513,375 41 18
-------------- -------------- -------------- ------------- ------------- --------------
Liabilities:
Payable for outstanding
purchases
Accrued expenses and
other payables
Transfer payables 191,269,141 6,966,652 16,715,590
-------------- -------------- -------------- ------------- ------------- --------------
Total liabilities 191,269,141 6,966,652 - 16,715,590 - -
-------------- -------------- -------------- ------------- ------------- --------------
Net assets available for
plan benefits $ 391,787,509 $ 6,966,704 $ - $ 16,797,785 $ 41 $ 18
============== ============== ============== ============== ============== ==============
<PAGE>
19
TRP Small RTN.A GMH
Cap Stock Wasting Wasting Loan
Fund Fund Fund Fund Other(1) Total
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $ 473,258,791
Prudential Life Insurance
Company of America 236,989,116
Metropolitan Life
Insurance Company* 594,847,154
Fidelity 25,803,449
Connecticut General 6,538,482
Monumental Life Insurance
Company 6,869,338
At fair value:
Fidelity Equity Income
Fund* 1,464,615,296
Raytheon Company Common
Stock Fund* 799,542,751
BT Pyramid Equity
Index Fund* 745,602,791
Fidelity Balanced Fund* 442,796,289
Fidelity Magellan Fund* 379,680,454
Fidelity Blue Chip Fund* 391,787,509
Templeton Foreign I Fund 6,966,704
Fidelity Investment Grade
Bond Fund -
Fidelity Retirement
Money Market 13,202,524
Vanguard Winsor 41
Vanguard Wellesley 18
TRP Small Cap Stock $ 348 348
Raytheon Class A Wasting
Stock Fund $ 116,129,149 116,129,149
Raytheon GMH Wasting
Stock Fund $ 172,859,819 172,859,819
Loans receivable from
participants $ 250,687,865 250,687,865
-------------- -------------- -------------- -------------- ------------- --------------
Total investments 348 116,129,149 172,859,819 250,687,865 - 6,128,177,888
-------------- -------------- -------------- -------------- ------------- --------------
Receivables:
Employer contribution 3,595,261
Accrued investment income
and other receivables 1,193,397 23,640 7,539,589
Transfer receivables 120,761,325 178,295,618 117,046,618 $ 855,826,675 4,035,178,551
Cash and cash equivalents 3,480,490 5,474,220 147,258,083
-------------- -------------- -------------- ------------- -------------- --------------
Total assets 348 241,564,361 356,653,297 367,734,483 855,826,675 10,321,749,372
-------------- -------------- -------------- ------------- -------------- --------------
Liabilities:
Payable for outstanding
purchases 1,932,125
Accrued expenses and
other payables 41,711 62,061 2,802,367
Transfer payables 120,761,325 178,295,618 117,046,618 3,179,351,876
-------------- -------------- -------------- ------------- -------------- --------------
Total liabilities - 120,803,036 178,357,679 117,046,618 - 3,184,086,368
-------------- -------------- -------------- ------------- -------------- --------------
Net assets available for
plan benefits $ 348 $120,761,325 $ 178,295,618 $ 250,687,865 $ 855,826,675 $7,137,663,004
============== ============== ============== ============== ============== ==============
Percentage of Master Trust that are Plan assets - 0.00%
*Represent more than 5% of net assets available for plan benefits
(1) Other represents Raytheon plans merging in from outside the Master Trust.
Note: Not all funds within the Master Trust are available options to
participants in the Plan.
</TABLE>
<PAGE>
20
RAYTHEON SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
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, 1997:
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* $351,035,073
Prudential Life 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 Fund* $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
============ ============ ============ ============ ============ ===========
<PAGE>
21
Templeton Investment Retirement
Blue Chip Foreign I Grade Money Loan
Fund Fund Bond Fund Market Fund Fund Total
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $351,035,073
Prudential Life 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 Fund* 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 - 0.004%
*Represent more than 5% of net assets available for plan benefits
Note: Not all funds within the Master Trust are available options to
participants in the Plan.
</TABLE>
<PAGE>
22
RAYTHEON SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
J. Master Trust, Continued:
The following is a summary of investment income by fund under the Master Trust
for the year ended December 31, 1998:
Fixed Raytheon Stock
Income Equity Common Index Balanced Magellan
Fund Fund Stock Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Net appreciation
(depreciation) of assets $ 30,695 $ 49,019,748 $74,202,083 $149,571,006 $16,091,158 $62,195,801
Interest & Dividends 81,886,632 86,279,682 1,792 42,537,357 13,255,763
----------- ------------ ----------- ------------ ----------- -----------
Total investment
income/(loss) $81,917,327 $135,299,430 $74,203,875 $149,571,006 $58,628,515 $75,451,564
=========== ============ =========== ============ =========== ===========
<PAGE>
23
Templeton Investment Retirement Vanguard Vanguard
Blue Chip Foreign I Grade Money Winsor Wellesley
Fund Fund Bond Fund Market Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Net appreciation
(depreciation) of assets $60,264,181 $(1,095,980) $ 17,635 $2,864,378 $1,379,950
Interest & Dividends 13,550,491 752,610 162,858 $ 349,740
----------- ----------- -------- ---------- ---------- ----------
Total investment
income/(loss) $73,814,672 $ (343,370) $180,493 $ 349,740 $2,864,378 $1,379,950
=========== =========== ======== ========== ========== ==========
<PAGE>
24
TRP Small RTN.A GMH
Cap Stock Wasting Wasting Loan
Fund Fund Fund Fund Total
<S> <C> <C> <C> <C> <C>
Investment income:
Net appreciation
(depreciation) of assets $ 15 $ (35,268) $44,604,025 $459,109,427
Interest & Dividends $15,334,403 254,111,328
----------- ---------- ----------- ----------- ------------
Total investment
income/(loss) $ 15 $ (35,268) $44,604,025 $15,334,403 $713,220,755
=========== ========== =========== =========== ============
</TABLE>
<PAGE>
1
EXHIBIT 99.8a
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (File No. 333-56117) of Raytheon Company of our report
dated June 4, 1999 relating to the financial statements of the Raytheon
California Hourly Savings and Investment Plan, which appears in this Form
10-K/A.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 29, 1999
<PAGE>
1
EXHIBIT 99.9
RAYTHEON TUCSON BARGAINING SAVINGS AND INVESTMENT PLAN
FINANCIAL STATEMENTS
TO ACCOMPANY 1998 FORM 5500
ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN
UNDER ERISA OF 1974
FOR THE YEAR ENDED DECEMBER 31, 1998
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, the
Plan administrator must file detailed financial information, including the
supplemental schedules, separately with the Department of Labor.
<PAGE>
2
Report of Independent Accountants
To the Participants and Administrator of
the Raytheon Tucson Bargaining Savings and Investment Plan:
In our opinion, the accompanying statements of net assets available for plan
benefits and the related statement of changes in net assets available for plan
benefits present fairly, in all material respects, the net assets available for
benefits of the Raytheon Tucson Bargaining Savings and Investment Plan (the
"Plan") at December 31, 1998 and 1997, and the changes in net assets available
for benefits for the year ended December 31, 1998 in conformity with generally
accepted accounting principles. 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 of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
As discussed in Notes A and H to the financial statements, the Board of
Directors of Raytheon Company voted on December 16, 1998, to merge the Plan into
the Raytheon Employee Savings and Investment Plan.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 4, 1999
<PAGE>
3
RAYTHEON TUCSON BARGAINING SAVINGS AND INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
as of December 31, 1998 and 1997
1998 1997
Assets:
Master trust investments:
At contract value (Notes B, E and I) $ 6,852,411 $ 4,511
At fair value (Notes B, F and I) 39,004,660 84,493
----------- -------
45,857,071 89,004
Receivables:
Accrued investment income and
other receivables 47,028 240
Cash and cash equivalents 893,087 657
----------- -------
Total assets 46,797,186 89,901
----------- -------
Liabilities:
Payable for outstanding purchases 5,252 260
Accrued expenses and other payables 8,858 76
Transfer payables (Note H) 46,783,076
----------- -------
Total liabilities 46,797,186 336
----------- -------
Net assets available for plan benefits $ - $89,565
=========== =======
The accompanying notes are an integral part of the financial statements.
<PAGE>
4
RAYTHEON TUCSON BARGAINING SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1998
Additions to net assets attributable to:
Investment income (Notes B, E and I):
Net appreciation of investments $ 2,228,840
Interest & Dividends 1,982,313
-----------
4,211,153
Contributions and deferrals:
Employee deferrals 3,570,498
Employer contributions 1,671,909
Transfers (Note G) 39,889,430
-----------
45,131,837
Total additions 49,342,990
-----------
Deductions from net assets attributable to:
Distributions to participants 2,644,901
Administrative expenses 4,578
Transfers (Note G and H) 46,783,076
-----------
Total deductions 49,432,555
-----------
Decrease in net assets (89,565)
Net assets, beginning of year 89,565
-----------
Net assets, end of year $ -
===========
The accompanying notes are an integral part of the financial statements.
<PAGE>
5
RAYTHEON TUCSON BARGAINING SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
A. Description of Plan:
General
As more fully described in Note H, the Raytheon Tucson Bargaining Savings and
Investment Plan (the "Plan") ceased to exist as of December 31, 1998 and
effective January 1, 1999, the Plan was merged into the Raytheon Employee
Savings and Investment Plan (RESIP). The following description of the Plan
provides only general information that is applicable through December 31, 1998.
Participants should refer to the plan document for a complete description of the
Plan's provisions.
The Plan was established on December 18, 1997. The Plan is a defined
contribution plan covering certain employees of Raytheon Company (the
"Company"). Effective December 18, 1997, General Motors Corporation employees
assumed in connection with the merger of the defense business of Hughes
Electronics Corporation with the Company (hereafter referred to as the "Hughes
transaction"), that participated in the Hughes Tucson Bargaining Employees'
Thrift and Savings Plan, became eligible to participate in the Plan.
Participants had the option to rollover amounts accumulated in plans sponsored
by General Motors Corporation to the Plan. The option to make a rollover
election extended until December 1, 1998. 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 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 combined with the investments of other similar
defined contribution plans of the Company into the Raytheon Company Master Trust
for Defined Contribution Plans ("Master Trust"). The truste 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 common stock for two full plan years following the plan year
for which the contributions are made, and are then allocated to participants'
accounts. For 1998, the annual employee deferral for a participant cannot exceed
$10,000. 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
<PAGE>
6
interest for specified periods of time, (b) the Fidelity Equity Income Fund
which invests in shares of a mutual fund consisting primarily of
income-producing equity securities, (c) a Raytheon Common Stock Fund which
invests in shares of Raytheon Company 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) the Fidelity Balanced Fund which
invests in shares of a mutual fund consisting of primarily equity securities,
bonds and money market instruments, (f) the Fidelity Magellan Fund, a growth
fund which invests primarily in equities of companies of all types and sizes,
and (g) the Fidelity Blue Chip Fund, a growth fund which invests primarily in
equities of well known and established companies. Amounts held in the RTN-A
Wasting Fund and GMH Wasting Fund are shares of Raytheon Company Class A common
stock or General Motors Class H common stock, respectively, that were
transferred into the Plan as a result of the Hughes transaction. These options
are not open for additional contributions and will only be available through
December 31, 2002.
Dividends and distributions from investments of the Fidelity Equity Income Fund,
the Raytheon Common Stock Fund, the Stock Index Fund, the Fidelity Balanced
Fund, the Fidelity Magellan Fund, the Fidelity Blue Chip Fund, the RTN-A Wasting
Fund and the GHM Wasting 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 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.
<PAGE>
7
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. Contract value approximates 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. Participant loans are valued at cost, which approximates fair value.
Security transactions are recorded on the 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. Investment income
includes both dividend and interest income.
<PAGE>
8
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:
The Internal Revenue Service has determined and informed the Company by letter
dated February 1999 that the Plan, as adopted on December 17, 1997, and related
Trust are designed in accordance with applicable sections of the Code. The Plan
has been amended since applying for 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 applicable requirements of the
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 which are
managed by insurance companies and investment management firms. 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>
9
Annualized Credited
Average Yield Interest Rate
For the year ended December 31, 1998:
Banker's Trust (WBS 92-485) 6.85% 6.85%
Metropolitan Life Insurance
Company (GIC GA-12908) 6.58% 6.58%
Metropolitan Life Insurance
Company (GIC GA-13659) 6.10% 6.10%
Prudential Asset Management
Company (GIC 917163-001) 6.75% 6.75%
Connecticut General (GIC 0025174) 5.58% 5.58%
Fidelity IPL (633-GCDC) 5.62% 5.62%
Monumental Life Insurance
Company (GIC BDA00463FR-00) 7.84% 7.84%
For the year ended December 31, 1997:
Banker's 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:
The Plan's trustee is Fidelity Management Trust Company (the "Trustee"). The
Trustee holds the funds for the Plan and is responsible for managing the Plan's
investment assets, executing all investment transactions, recording approved
transactions, and, therefore these transactions qualify as party-in-interest.
In accordance with the provisions of the Plan, the Trustee acts as the Plan's
agent for purchases and sales of shares of Raytheon Company common stock. These
transactions are performed on a Master Trust Level. For the Master Trust,
purchases amounted to $288,116,995 and sales amounted to $257,878,566 for the
year ended December 31, 1998.
G. Transfers:
Transfers include transfers of participant accounts, individually and/or in
groups, between the 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 Plan and similar savings plans of
other companies for those participants who changed companies during the year.
During the year, amounts rolled over by former employees of General Motors
Corporation who participated in the Hughes Tucson Bargaining Employees' Thrift
and Savings Plan and who became eligible to participate in the Plan totaled
$33,217,821.
<PAGE>
10
H. Transfer Payables:
As part of an overall effort to minimize plan design differences and increase
administrative efficiencies, the Board of Directors of Raytheon Company voted on
December 16, 1998 to merge the participants and their account balances into the
RESIP. The Plan ceased to exist on December 31, 1998 and effective January 1,
1999, the plan provisions of the RESIP govern. The transfer payable amount
represents a complete transfer of assets to the RESIP.
<PAGE>
11
I. Fund Data:
The following is a summary of net assets available for plan benefits by
fund as of December 31, 1998:
<TABLE>
<CAPTION>
Participant Directed
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:
Master trust investments:
At contract value:
Bankers Trust $2,412,371
Prudential Insurance
Company of America 1,208,018
Metropolitan Life
Insurance Company 3,032,149
Fidelity 131,529
Connecticut General 33,329
Monumental Life
Insurance Company 35,015
At fair value:
Fidelity Equity
Income Fund $15,405,128
Raytheon Company
Common Stock Fund $680,552
BT Pyramid Equity
Index Fund $982,271
Fidelity Balanced
Fund $3,878,790
Fidelity Magellan
Fund $3,145,397
Fidelity Blue
Chip Fund $2,357,467
Wasting Stock Fund
Raytheon GMH
Wasting Stock Fund
Loans receivable
from participants
---------- ----------- -------- -------- ---------- ---------- ----------
Total investments 6,852,411 15,405,128 680,552 982,271 3,878,790 3,145,397 2,357,467
---------- ----------- -------- -------- ---------- ---------- ----------
Receivables:
Accrued investment income
and other receivables 4,042 2,074
Cash and cash equivalents 631,915 9,366 4,387
---------- ----------- -------- -------- ---------- ---------- ----------
Total assets 7,484,326 15,405,128 693,960 988,732 3,878,790 3,145,397 2,357,467
---------- ----------- -------- -------- ---------- ---------- ----------
Liabilities:
Payable for outstanding
purchases 1,644
Accrued expenses and other
payables 1,578 1,113
Transfer payables 7,484,326 15,405,128 690,738 987,619 3,878,790 3,145,397 2,357,467
---------- ----------- -------- -------- ---------- ---------- ----------
Total liabilities 7,484,326 15,405,128 693,960 988,732 3,878,790 3,145,397 2,357,467
---------- ---------- -------- -------- ---------- ---------- ----------
Net assets available for
plan benefits $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
========== =========== ======== ======== ========== ========== ==========
<PAGE>
12
Participant Directed Non-Participant
Directed
RTN.A GMH Raytheon
Wasting Wasting Loan Common
Fund Fund Fund Stock Fund Total
<S> <C> <C> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust $ 2,412,371
Prudential Insurance
Company of America 1,208,018
Metropolitan Life
Insurance Company 3,032,149
Fidelity 131,529
Connecticut General 33,329
Monumental Life
Insurance Company 35,015
At fair value:
Fidelity Equity
Income Fund 15,405,128
Raytheon Company
Common Stock Fund $1,492,857 2,173,409
BT Pyramid Equity
Index Fund 982,271
Fidelity Balanced
Fund 3,878,790
Fidelity Magellan
Fund 3,145,397
Fidelity Blue
Chip Fund 2,357,467
Raytheon Class A
Wasting Stock Fund $3,061,517 3,061,517
Raytheon GMH
Wasting Stock Fund $4,266,631 4,266,631
Loans receivable
from participants $3,734,050 3,734,050
---------- ---------- ---------- ---------- -----------
Total investments 3,061,517 4,266,631 3,734,050 1,492,857 45,857,071
---------- ---------- ---------- ---------- -----------
Receivables:
Accrued investment income
and other receivables 31,461 584 8,867 47,028
Cash and cash equivalents 91,756 135,118 20,545 893,087
---------- ---------- ---------- ---------- -----------
Total assets 3,184,734 4,402,333 3,734,050 1,522,269 46,797,186
---------- ---------- ---------- ---------- -----------
Liabilities:
Payable for outstanding
purchases 3,608 5,252
Accrued expenses and
other payables 1,100 1,606 3,461 8,858
Transfer payables 3,183,634 4,400,727 3,734,050 1,515,200 46,783,076
---------- ---------- ---------- ---------- -----------
Total liabilities 3,184,734 4,402,333 3,734,050 1,522,269 46,797,186
---------- ---------- ---------- ---------- -----------
Net assets available for
plan benefits $ 0 $ 0 $ 0 $ 0 $ 0
========== ========== ========== ========== ===========
</TABLE>
<PAGE>
13
I. Fund Data, Continued:
The following is a summary of net assets available for plan benefits by
fund as of December 31, 1997:
<TABLE>
<CAPTION>
Participant Directed
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 $1,685
Prudential Insurance
Company of America 1,045
Metropolitan Life
Insurance Company 1,781
At fair value:
Fidelity Equity Income Fund* $18,557
Raytheon Company Common Stock* $3,075
BT Pyramid Equity Index Fund* $6,028
Fidelity Balanced Fund* $5,772
Fidelity Magellan Fund* $15,517
Fidelity Blue Chip Fund*
------ -------- ------ ------ ------ -------
Total investments 4,511 18,557 3,075 6,028 5,772 15,517
------ -------- ------ ------ ------ -------
Receivables:
Accrued investment income
and other receivables 23 14
Cash and cash equivalents 45 56 59
------ ------- ------ ------ ------ -------
Total assets 4,556 18,557 3,154 6,101 5,772 15,517
------ ------- ------ ------ ------ -------
Liabilities:
Payable for outstanding purchases 26
Accrued expenses and other
payables 6 15
------ ------- ------ ------ ------ ------
Total liabilities - - 32 15 - -
------ ------- ------ ------ ------ ------
Net assets available for plan
benefits $4,556 $18,557 $3,122 $6,086 $5,772 $15,517
====== ======= ====== ====== ====== =======
*Represents more than 5% of net assets available for plan benefits
<PAGE>
14
Participant Non-Participant
Directed Directed
Raytheon
Blue Chip Common Stock
Fund Fund Total
<S> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust $ 1,685
Prudential Insurance
Company of America 1,045
Metropolitan Life
Insurance Company 1,781
At fair value:
Fidelity Equity Income Fund* 18,557
Raytheon Company Common Stock* $27,479 30,554
BT Pyramid Equity Index Fund* 6,028
Fidelity Balanced Fund* 5,772
Fidelity Magellan Fund* 15,517
Fidelity Blue Chip Fund* $8,065 8,065
------ ------- -------
Total investments 8,065 27,479 89,004
------ ------- -------
Receivables:
Accrued investment income
and other receivables 203 240
Cash and cash equivalents 497 657
------ ------- -------
Total assets 8,065 28,179 89,901
------ ------- -------
Liabilities:
Payable for outstanding purchases 234 260
Accrued expenses and other
payables 55 76
------ ------ -------
Total liabilities - 289 336
------ ------ -------
Net assets available for plan
benefits $8,065 $27,890 $89,565
====== ======= =======
*Represents more than 5% of net assets available for plan benefits
</TABLE>
<PAGE>
15
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, 1998:
<TABLE>
<CAPTION>
Participant Directed
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>
Additions to net assets
attributable to:
Investment income:
Net appreciation
(depreciation) of
investments $ 257 $ 145,741 $ 5,850 $115,620 $ 139,829 $ 343,355 $ 296,967
Interest & Dividends 367,313 883,995 365,461 100,830 73,114
---------- ---------- -------- -------- ---------- ---------- ----------
367,570 1,029,736 5,850 115,620 505,290 444,185 370,081
---------- ---------- -------- -------- ---------- ---------- ----------
Contributions and deferrals:
Employee deferrals 269,806 1,051,367 201,749 341,115 333,549 888,030 484,882
Employer contributions
Transfers 7,586,320 16,505,038 137,663 198,871 3,677,882 570,655 419,592
---------- ---------- -------- -------- ---------- ---------- ----------
7,856,126 17,556,405 339,412 539,986 4,011,431 1,458,685 904,474
---------- ---------- -------- -------- ---------- ---------- ----------
Total additions 8,223,696 18,586,141 345,262 655,606 4,516,721 1,902,870 1,274,555
---------- ---------- -------- -------- ---------- ---------- ----------
Deductions from net assets
attributable to:
Distributions to
participants 840,798 776,023 59,154 22,858 164,311 82,397 80,145
Administrative expenses 913 1,591 26 50 354 142 80
Transfers
Transfers plan mergers 7,484,326 15,405,128 690,738 987,619 3,878,790 3,145,397 2,357,467
---------- ---------- -------- ---------- ---------- ---------- ----------
Total deductions 8,326,037 16,182,742 749,918 1,010,527 4,043,455 3,227,936 2,437,692
---------- ---------- -------- ---------- ---------- ---------- ----------
Interfund transfers 97,785 (2,421,956) 401,534 348,835 (479,038) 1,309,549 1,155,072
---------- ---------- -------- ---------- ---------- ---------- ----------
Decrease in net assets (4,556) (18,557) (3,122) (6,086) (5,772) (15,517) (8,065)
Net assets, beginning
of year 4,556 18,557 3,122 6,086 5,772 15,517 8,065
---------- ---------- -------- ---------- ---------- ---------- ----------
Net assets, end of year $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
========== ========== ======== ========== ========== ========== ==========
<PAGE>
16
Participant Directed Non-Participant
Directed
RTN.A GMH Raytheon
Wasting Wasting Loan Common
Fund Fund Fund Stock Fund Total
<S> <C> <C> <C> <C> <C>
Additions to net assets
attributable to:
Investment income:
Net appreciation
(depreciation) of
investments $ (7,016) $ 1,199,091 $ (10,854) $ 2,228,840
Interest & Dividends $ 191,600 1,982,313
---------- ----------- ---------- ---------- -----------
(7,016) 1,199,091 191,600 (10,854) 4,211,153
---------- ----------- ---------- ---------- -----------
Contributions and deferrals:
Employee deferrals 3,570,498
Employer contributions 1,671,909 1,671,909
Transfers 3,893,484 4,474,025 2,424,586 1,314 39,889,430
---------- ---------- ---------- ---------- -----------
3,893,484 4,474,025 2,424,586 1,673,223 45,131,837
---------- ---------- ---------- ---------- -----------
Total additions 3,886,468 5,673,116 2,616,186 1,662,369 49,342,990
---------- ---------- ---------- ---------- -----------
Deductions from net assets
attributable to:
Distributions to
participants 223,871 319,876 41,519 33,949 2,644,901
Administrative expenses 531 855 36 4,578
Transfers -
Transfers plan mergers 3,183,634 4,400,727 3,734,050 1,515,200 46,783,076
---------- ---------- ---------- ---------- -----------
Total deductions 3,408,036 4,721,458 3,775,569 1,549,185 49,432,555
---------- ---------- ---------- ---------- -----------
Interfund transfers (478,432) (951,658) 1,159,383 (141,074) -
---------- ---------- ---------- ---------- -----------
Decrease in net assets - - - (27,890) (89,565)
Net assets, beginning
of year - - - 27,890 89,565
---------- ---------- ---------- ---------- -----------
Net assets, end of year $ 0 $ 0 $ 0 $ 0 $ 0
========== ========== ========== ========== ===========
</TABLE>
<PAGE>
17
J. Master Trust:
All plan investments are included under the Master Trust. At December 31,
1998, assets of the Plan represented 0% of the total assets under the Master
Trust. This has decreased from .003% at December 31, 1997.
The following is a summary of net assets available for plan benefits by
fund under the Master Trust as of December 31, 1998:
<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* $ 473,258,791
Prudential Life Insurance
Company of America 236,989,116
Metropolitan Life
Insurance Company* 594,847,154
Fidelity 25,803,449
Connecticut General 6,538,482
Monumental Life Insurance
Company 6,869,338
At fair value:
Fidelity Equity Income
Fund* $1,464,615,296
Raytheon Company Common
Stock Fund* $ 799,542,751
BT Pyramid Equity
Index Fund* $ 745,602,791
Fidelity Balanced Fund* $ 442,796,289
Fidelity Magellan Fund* $ 379,680,454
Fidelity Blue Chip Fund*
Templeton Foreign I Fund
Fidelity Investment Grade
Bond Fund
Fidelity Retirement
Money Market
Vanguard Winsor
Vanguard Wellesley
TRP Small Cap Stock
Raytheon Class A Wasting
Stock Fund
Raytheon GMH Wasting
Stock Fund
Loans receivable from
participants
-------------- -------------- -------------- -------------- -------------- --------------
Total investments 1,344,306,330 1,464,615,296 799,542,751 745,602,791 442,796,289 379,680,454
-------------- -------------- -------------- -------------- -------------- --------------
Receivables:
Employer contribution
Accrued investment income
and other receivables 4,748,948 1,573,604
Transfer receivables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803
Cash and cash equivalents 123,969,201 11,004,025 3,330,147
-------------- -------------- -------------- -------------- -------------- --------------
Total assets 2,048,537,201 2,226,757,712 1,255,380,751 967,248,229 755,173,618 616,369,257
-------------- -------------- -------------- -------------- -------------- --------------
Liabilities:
Payables for outstanding
purchases 1,932,125
Accrued expenses and
other payables 1,853,618 844,977
Transfer payables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803
-------------- -------------- -------------- -------------- -------------- --------------
Total liabilities 580,261,670 762,142,416 443,870,770 217,586,664 312,377,329 236,688,803
-------------- -------------- -------------- -------------- -------------- --------------
Net assets available for
plan benefits $1,468,275,531 $1,464,615,296 $ 811,509,981 $ 749,661,565 $ 442,796,289 $ 379,680,454
============== ============== ============== ============== ============== ==============
<PAGE>
18
Templeton Investment Retirement Vanguard Vanguard
Blue Chip Foreign I Grade Money Winsor Wellesley
Fund Fund Bond Fund Market Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust*
Prudential Life Insurance
Company of America
Metropolitan Life
Insurance Company*
Fidelity
Connecticut General
Monumental Life Insurance
Company
At fair value:
Fidelity Equity Income
Fund*
Raytheon Company Common
Stock Fund*
BT Pyramid Equity
Index Fund*
Fidelity Balanced Fund*
Fidelity Magellan Fund*
Fidelity Blue Chip Fund* $ 391,787,509
Templeton Foreign I Fund $ 6,966,704
Fidelity Investment Grade
Bond Fund $ -
Fidelity Retirement
Money Market $ 13,202,524
Vanguard Winsor $ 41
Vanguard Wellesley $ 18
TRP Small Cap Stock
Raytheon Class A Wasting
Stock Fund
Raytheon GMH Wasting
Stock Fund
Loans receivable from
participants
-------------- -------------- -------------- ------------- ------------- --------------
Total investments 391,787,509 6,966,704 - 13,202,524 41 18
-------------- -------------- -------------- ------------- ------------- --------------
Receivables:
Employer contribution 3,595,261
Accrued investment income
and other receivables
Transfer receivables 191,269,141 6,966,652 16,715,590
Cash and cash equivalents
-------------- -------------- -------------- ------------- ------------- --------------
Total assets 583,056,650 13,933,356 - 33,513,375 41 18
-------------- -------------- -------------- ------------- ------------- --------------
Liabilities:
Payable for outstanding
purchases
Accrued expenses and
other payables
Transfer payables 191,269,141 6,966,652 16,715,590
-------------- -------------- -------------- ------------- ------------- --------------
Total liabilities 191,269,141 6,966,652 - 16,715,590 - -
-------------- -------------- -------------- ------------- ------------- --------------
Net assets available for
plan benefits $ 391,787,509 6,966,704 $ - $ 16,797,785 $ 41 $ 18
============== ============== ============== ============== ============== ==============
<PAGE>
19
TRP Small RTN.A GMH
Cap Stock Wasting Wasting Loan
Fund Fund Fund Fund Other(1) Total
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $ 473,258,791
Prudential Life Insurance
Company of America 236,989,116
Metropolitan Life
Insurance Company* 594,847,154
Fidelity 25,803,449
Connecticut General 6,538,482
Monumental Life Insurance
Company 6,869,338
At fair value:
Fidelity Equity Income
Fund* 1,464,615,296
Raytheon Company Common
Stock Fund* 799,542,751
BT Pyramid Equity
Index Fund* 745,602,791
Fidelity Balanced Fund* 442,796,289
Fidelity Magellan Fund* 379,680,454
Fidelity Blue Chip Fund* 391,787,509
Templeton Foreign I Fund 6,966,704
Fidelity Investment Grade
Bond Fund -
Fidelity Retirement
Money Market 13,202,524
Vanguard Winsor 41
Vanguard Wellesley 18
TRP Small Cap Stock $ 348 348
Raytheon Class A Wasting
Stock Fund $ 116,129,149 116,129,149
Raytheon GMH Wasting
Stock Fund $ 172,859,819 172,859,819
Loans receivable from
participants $ 250,687,865 250,687,865
-------------- -------------- -------------- -------------- ------------- --------------
Total investments 348 116,129,149 172,859,819 250,687,865 - 6,128,177,888
-------------- -------------- -------------- -------------- ------------- --------------
Receivables:
Employer contribution 3,595,261
Accrued investment income
and other receivables 1,193,397 23,640 7,539,589
Transfer receivables 120,761,325 178,295,618 117,046,618 $ 855,826,675 4,035,178,551
Cash and cash equivalents 3,480,490 5,474,220 147,258,083
-------------- -------------- -------------- ------------- -------------- --------------
Total assets 348 241,564,361 356,653,297 367,734,483 855,826,675 10,321,749,372
-------------- -------------- -------------- ------------- -------------- --------------
Liabilities:
Payable for outstanding
purchases 1,932,125
Accrued expenses and
other payables 41,711 62,061 2,802,367
Transfer payables 120,761,325 178,295,618 117,046,618 3,179,351,876
-------------- -------------- -------------- ------------- -------------- --------------
Total liabilities - 120,803,036 178,357,679 117,046,618 - 3,184,086,368
-------------- -------------- -------------- ------------- -------------- --------------
Net assets available for
plan benefits $ 348 $120,761,325 $ 178,295,618 $ 250,687,865 $ 855,826,675 $7,137,663,004
============== ============== ============== ============== =============== ==============
Percentage of Master Trust that are Plan assets - 0.00%
*Represent more than 5% of net assets available for plan benefits
(1) Other represents Raytheon plans merging in from outside the Master Trust.
Note: Not all funds within the Master Trust are available options to
participants in the Plan.
</TABLE>
<PAGE>
20
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, 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:
Investments:
At contract value:
Bankers Trust* $351,035,073
Prudential Life 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 Fund* $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
============ ============ ============ ============ ============ ===========
<PAGE>
21
Templeton Investment Retirement
Blue Chip Foreign I Grade Money Loan
Fund Fund Bond Fund Market Fund Fund Total
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $351,035,073
Prudential Life 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 Fund* 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 - 0.003%
*Represent more than 5% of net assets available for plan benefits
Note: Not all funds within the Master Trust are available options to
participants in the Plan.
</TABLE>
<PAGE>
22
J. Master Trust, Continued:
The following is a summary of investment income by fund under the Master Trust
for the year ended December 31, 1998:
<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>
Investment income:
Net appreciation
(depreciation) of assets $ 30,695 $ 49,019,748 $74,202,083 $149,571,006 $16,091,158 $62,195,801
Interest & Dividends 81,886,632 86,279,682 1,792 42,537,357 13,255,763
----------- ------------ ----------- ------------ ----------- -----------
Total investment
income/(loss) $81,917,327 $135,299,430 $74,203,875 $149,571,006 $58,628,515 $75,451,564
=========== ============ =========== ============ =========== ===========
<PAGE>
23
Templeton Investment Retirement Vanguard Vanguard
Blue Chip Foreign I Grade Money Winsor Wellesley
Fund Fund Bond Fund Market Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Net appreciation
(depreciation) of assets $60,264,181 $(1,095,980) $ 17,635 $2,864,378 $1,379,950
Interest & Dividends 13,550,491 752,610 162,858 $ 349,740
----------- ----------- -------- ---------- ---------- ----------
Total investment
income/(loss) $73,814,672 $ (343,370) $180,493 $ 349,740 $2,864,378 $1,379,950
=========== =========== ======== ========== ========== ==========
<PAGE>
24
TRP Small RTN.A GMH
Cap Stock Wasting Wasting Loan
Fund Fund Fund Fund Total
<S> <C> <C> <C> <C> <C>
Investment income:
Net appreciation
(depreciation) of assets $ 15 $ (35,268) $44,604,025 $459,109,427
Interest & Dividends $15,334,403 254,111,328
----------- ---------- ----------- ----------- ------------
Total investment
income/(loss) $ 15 $ (35,268) $44,604,025 $15,334,403 $713,220,755
=========== ========== =========== =========== ============
</TABLE>
<PAGE>
1
EXHIBIT 99.9a
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (File No. 333-56117) of Raytheon Company of our report
dated June 4, 1999 relating to the financial statements of the Raytheon Tucson
Bargaining Savings and Investment Plan, which appears in this Form 10-K/A.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 29, 1999
<PAGE>
1
EXHIBIT 99.10
RAYTHEON SAVINGS AND INVESTMENT PLAN (10014)
FINANCIAL STATEMENTS
TO ACCOMPANY 1998 FORM 5500
ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN
UNDER ERISA OF 1974
FOR THE YEAR ENDED DECEMBER 31, 1998
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, the
Plan administrator must file detailed financial information, including the
supplemental schedules, separately with the Department of Labor.
<PAGE>
2
Report of Independent Accountants
To the Participants and Administrator of
the Raytheon Savings and Investment Plan (10014):
In our opinion, the accompanying statements of net assets available for plan
benefits and the related statement of changes in net assets available for plan
benefits present fairly, in all material respects, the net assets available for
benefits of the Raytheon Savings and Investment Plan (10014)(the "Plan") at
December 31, 1998 and 1997, and the changes in net assets available for benefits
for the year ended December 31, 1998 in conformity with generally accepted
accounting principles. 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 of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
As discussed in Notes A and H to the financial statements, the Board of
Directors of Raytheon Company voted on December 16, 1998, to merge the Plan
into the Raytheon Employee Savings and Investment Plan.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 4, 1999
<PAGE>
3
RAYTHEON SAVINGS AND INVESTMENT PLAN (10014)
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
as of December 31, 1998 and 1997
1998 1997
Assets:
Master trust investments:
At contract value (Notes B, E and I) $ 2,215,995 $ 2,280
At fair value (Notes B, F and I) 16,122,546 59,325
----------- -------
18,338,541 61,605
Receivables:
Accrued investment income
and other receivables 22,764 155
Cash and cash equivalents 323,185 426
----------- -------
Total assets 18,684,490 62,186
----------- -------
Liabilities:
Payable for outstanding purchases 2,857 165
Accrued expenses and other payables 4,636 51
Transfer payables (Note H) 18,676,997
----------- -------
Total liabilities 18,684,490 216
----------- -------
Net assets available for plan benefits $ - $61,970
=========== =======
The accompanying notes are an integral part of the financial statements.
<PAGE>
4
RAYTHEON SAVINGS AND INVESTMENT PLAN (10014)
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1998
Additions to net assets attributable to:
Investment income (Notes B, E and I):
Net appreciation of investments $ 1,071,553
Interest & Dividends 757,891
-----------
1,829,444
Contributions and deferrals:
Employee deferrals 2,527,892
Employer contributions 922,490
Transfers (Note G) 14,208,728
----------
17,659,110
Total additions 19,488,554
-----------
Deductions from net assets attributable to:
Distributions to participants 849,450
Administrative expenses 2,995
Transfers (Note G and H) 18,698,079
-----------
Total deductions 19,550,524
-----------
Decrease in net assets (61,970)
Net assets, beginning of year 61,970
-----------
Net assets, end of year $ -
===========
The accompanying notes are an integral part of the financial statements.
<PAGE>
5
RAYTHEON SAVINGS AND INVESTMENT PLAN (10014)
NOTES TO FINANCIAL STATEMENTS
A. Description of Plan:
General
As more fully described in Note H, the Raytheon Savings and Investment Plan
(10014) (the "Plan") ceased to exist as of December 31, 1998 and effective
January 1, 1999 the Plan was merged into the Raytheon Employee Savings and
Investment Plan (RESIP). The following description of the Plan provides only
general information that is applicable through December 31, 1998. Participants
should refer to the plan document for a complete description of the Plan's
provisions.
The Plan, which was established on December 18, 1997, is a defined contribution
plan covering certain employees of Raytheon Company (the "Company"). Effective
December 18, 1997, employees assumed in connection with the merger of the
defense business of Hughes Electronics Corporation with the Company (hereafter
referred to as the "Hughes transaction") that participated in the Hughes Thrift
and Savings Plan became eligible to participate in the Plan. Participants had
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 extended until December 1, 1998. 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 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 combined with the investments of other similar
defined contribution plans of the Company into the Raytheon Company Master Trust
for Defined Contribution Plans ("Master Trust"). 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>
6
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 common stock for two full plan years following the plan year
for which the contributions are made, and are then allocated to participants'
accounts. For 1998, the annual employee deferral for a participant cannot exceed
$10,000. 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) the Fidelity Equity Income Fund which invests in
shares of a mutual fund consisting primarily of income-producing equity
securities, (c) a Raytheon Common Stock Fund which invests in shares of Raytheon
Company 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) the Fidelity Balanced Fund which invests in shares of a mutual fund
consisting of primarily equity securities, bonds and money market instruments,
(f) the Fidelity Magellan Fund, a growth fund which invests primarily in
equities of companies of all types and sizes, and (g) the Fidelity Blue Chip
Fund, a growth fund which invests primarily in equities of well known and
established companies. Amounts held in the RTN-A Wasting Fund and GMH Wasting
Fund are shares of Raytheon Company Class A common stock or General Motors Class
H common stock, respectively, that were transferred into the Plan as a result of
the Hughes transaction. These options are not open for additional contributions
and will only be available through December 31, 2002.
Dividends and distributions from investments of the Fidelity Equity Income Fund,
the Raytheon Common Stock Fund, the Stock Index Fund, the Fidelity Balanced
Fund, the Fidelity Magellan Fund, the Fidelity Blue Chip Fund, the RTN-A Wasting
Fund and the GHM Wasting 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 completion of five years of service
or upon 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.
<PAGE>
7
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.
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. Contract value approximates 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. Participant loans are valued at cost, which approximates fair value.
Security transactions are recorded on the 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.
<PAGE>
8
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. Investment income
includes both dividend and interest income.
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:
The Internal Revenue Service has determined and informed the Company by letter
dated January 1999 that the Plan, as adopted on December 17, 1997, and related
trust are designed in accordance with applicable sections of the Code. The Plan
has been amended since applying for 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 applicable requirements of the
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>
9
E. Investment Contracts:
The Plan invests in collateralized fixed income investment portfolios which are
managed by insurance companies and investment management firms. 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, 1998:
Banker's Trust (WBS 92-485) 6.85% 6.85%
Metropolitan Life Insurance
Company (GIC GA-12908) 6.58% 6.58%
Metropolitan Life Insurance
Company (GIC GA-13659) 6.10% 6.10%
Prudential Asset Management
Company (GIC 917163-001) 6.75% 6.75%
Connecticut General (GIC 0025174) 5.58% 5.58%
Fidelity IPL (633-GCDC) 5.62% 5.62%
Monumental Life Insurance
Company (GIC BDA00463FR-00) 7.84% 7.84%
For the year ended December 31, 1997:
Banker's 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:
The Plan's trustee is Fidelity Management Trust Company (the "Trustee"). The
Trustee holds the funds for the Plan and is responsible for managing the Plan's
investment assets, executing all investment transactions, recording approved
transactions, and, therefore these transactions qualify as party-in-interest.
In accordance with the provisions of the Plan, the Trustee acts as the Plan's
agent for purchases and sales of shares of Raytheon Company common stock. These
transactions are performed on a Master Trust level. For the Master Trust,
purchases amounted to $288,116,995 and sales amounted to $257,878,566 for the
year ended December 31, 1998.
<PAGE>
10
G. Transfers:
Transfers include transfers of participant accounts, individually and/or in
groups, between the 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 Plan and similar savings plans of
other companies for those participants who changed companies during the year.
During the year, amounts rolled over by former employees of the defense business
of Hughes Electronics Corporation who participated in the Hughes Thrift and
Savings Plan and who became eligible to participate in the Plan totaled
$12,290,388.
H. Transfer Payables:
As part of an overall effort to minimize plan design differences and increase
administrative efficiencies, the Board of Directors of the Raytheon Company
voted on December 16, 1998 to merge the participants and their account balances
into the RESIP. The Plan ceased to exist on December 31, 1998 and effective
January 1, 1999, the plan provisions of the RESIP govern. The transfer payable
amount represents a complete transfer of assets to the RESIP.
<PAGE>
11
I. Fund Data:
The following is a summary of net assets available for plan benefits by
fund as of December 31, 1998:
<TABLE>
<CAPTION>
Participant Directed
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:
Master trust investments:
At contract value:
Bankers Trust $ 780,134
Prudential Insurance
Company of America 390,660
Metropolitan Life
Insurance Company 980,564
Fidelity 42,535
Connecticut General 10,778
Monumental Life
Insurance Company 11,324
At fair value:
Fidelity Equity
Income Fund $5,137,337
Raytheon Company
Common Stock Fund $297,484
BT Pyramid Equity
Index Fund $622,923
Fidelity Balanced
Fund $2,134,411
Fidelity Magellan
Fund $1,517,997
Fidelity Blue
Chip Fund $1,315,762
Raytheon Class A
Wasting Stock Fund
Raytheon GMH
Wasting Stock Fund
Loans receivable
from participants
---------- ---------- -------- -------- ---------- ---------- ----------
Total investments 2,215,995 5,137,337 297,484 622,923 2,134,411 1,517,997 1,315,762
---------- ---------- -------- -------- ---------- ---------- ----------
Receivables:
Accrued investment income
and other receivables 1,767 1,315
Cash and cash equivalents 204,355 4,094 2,782
---------- ---------- -------- -------- ---------- ---------- ----------
Total assets 2,420,350 5,137,337 303,345 627,020 2,134,411 1,517,997 1,315,762
---------- ---------- -------- -------- ---------- ---------- ----------
Liabilities:
Payable for outstanding
purchases 719
Accrued expenses and other
payables 690 706
Transfer payables 2,420,350 5,137,337 301,936 626,314 2,134,411 1,517,997 1,315,762
---------- ---------- -------- -------- ---------- ---------- ----------
Total liabilities 2,420,350 5,137,337 303,345 627,020 2,134,411 1,517,997 1,315,762
---------- ---------- -------- -------- ---------- ---------- ----------
Net assets available for
plan benefits $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
========== ========== ======== ======== ========== ========== ==========
<PAGE>
12
Participant Directed Non-Participant
Directed
RTN.A GMH Raytheon
Wasting Wasting Loan Common
Fund Fund Fund Stock Fund Total
<S> <C> <C> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust $ 780,134
Prudential Insurance
Company of America 390,660
Metropolitan Life
Insurance Company 980,564
Fidelity 42,535
Connecticut General 10,778
Monumental Life
Insurance Company 11,324
At fair value:
Fidelity Equity
Income Fund 5,137,337
Raytheon Company
Common Stock Fund $884,744 1,182,228
BT Pyramid Equity
Index Fund 622,923
Fidelity Balanced
Fund 2,134,411
Fidelity Magellan
Fund 1,517,997
Fidelity Blue
Chip Fund 1,315,762
Raytheon Class A
Wasting Stock Fund $1,379,518 1,379,518
Raytheon GMH
Wasting Stock Fund $1,845,149 1,845,149
Loans receivable
from participants $987,221 987,221
---------- ---------- -------- -------- -----------
Total investments 1,379,518 1,845,149 987,221 884,744 $18,338,541
---------- ---------- -------- -------- -----------
Receivables:
Accrued investment income
and other receivables 14,176 252 5,254 22,764
Cash and cash equivalents 41,345 58,433 12,176 323,185
---------- ---------- -------- -------- -----------
Total assets 1,435,039 1,903,834 987,221 902,174 $18,684,490
---------- ---------- -------- -------- -----------
Liabilities:
Payable for outstanding
purchases 2,138 2,857
Accrued expenses and
other payables 495 694 2,051 4,636
Transfer payables 1,434,544 1,903,140 987,221 897,985 18,676,997
---------- ---------- -------- -------- -----------
Total liabilities 1,435,039 1,903,834 987,221 902,174 $18,684,490
---------- ---------- -------- -------- -----------
Net assets available for
plan benefits $ 0 $ 0 $ 0 $ 0 $ 0
========== ========== ======== ========= ===========
</TABLE>
<PAGE>
13
I. Fund Data, Continued:
The following is a summary of net assets available for plan benefits by
fund as of December 31, 1997:
<TABLE>
<CAPTION>
Participant Directed
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 $ 852
Prudential Insurance
Company of America 528
Metropolitan Life
Insurance Company 900
At fair value:
Fidelity Equity Income Fund* $8,617
Raytheon Company Common Stock* $3,715
BT Pyramid Equity Index Fund* $5,307
Fidelity Balanced Fund* $4,183
Fidelity Magellan Fund* $13,244
Fidelity Blue Chip Fund*
Loans receivable from participants*
------ ------- ------ ------ ------ -------
Total investments 2,280 8,617 3,715 5,307 4,183 13,244
------ ------- ------ ------ ------ -------
Receivables:
Accrued investment income
and other receivables 27 12
Cash and cash equivalents 23 67 52
------ ------ ------ ------ ------ -------
Total assets 2,303 8,617 3,809 5,371 4,183 13,244
------ ------ ------ ------ ------ -------
Liabilities:
Payable for outstanding purchases 32
Accrued expenses and other
payables 7 13
------ ------ ------ ------ ------ ------
Total liabilities - - 39 13 - -
------ ------ ------ ------ ------ ------
Net assets available for plan
benefits $2,303 $8,617 $3,770 $5,358 $4,183 $13,244
====== ====== ====== ====== ====== =======
*Represents more than 5% of net assets available for plan benefits
<PAGE>
14
Participant Non-Participant
Directed Directed
Raytheon
Blue Chip Common Stock
Fund Fund Total
<S> <C> <C> <C>
Assets:
Master trust investments:
At contract value:
Bankers Trust $ 852
Prudential Insurance
Company of America 528
Metropolitan Life
Insurance Company 900
At fair value:
Fidelity Equity Income Fund* 8,617
Raytheon Company Common Stock* $15,666 19,381
BT Pyramid Equity Index Fund* 5,307
Fidelity Balanced Fund* 4,183
Fidelity Magellan Fund* 13,244
Fidelity Blue Chip Fund* $8,593 8,593
------ ------- -------
Total investments 8,593 15,666 61,605
------ ------- -------
Receivables:
Accrued investment income
and other receivables 116 155
Cash and cash equivalents 284 426
------ ------- -------
Total assets 8,593 16,066 62,186
------ ------- -------
Liabilities:
Payable for outstanding purchases 133 165
Accrued expenses and other
payables 31 51
------ ------ -------
Total liabilities - 164 216
------ ------ -------
Net assets available for plan
benefits $8,593 $15,902 $61,970
====== ======= =======
*Represents more than 5% of net assets available for plan benefits
</TABLE>
<PAGE>
15
I. Fund Data, Continued:
<TABLE>
<CAPTION>
The following is a summary of changes in net assets available for plan
benefits by fund for the year ended December 31, 1998:
Participant Directed
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>
Additions to net assets
attributable to:
Investment income:
Net appreciation
(depreciation) of
investments $ 83 $ 79,465 $ (5,737) $ 90,003 $ 64,373 $ 186,154 $ 160,692
Interest & Dividends 114,180 305,170 200,836 50,249 36,560
---------- ---------- -------- -------- ---------- ---------- ----------
114,263 384,635 (5,737) 90,003 265,209 236,403 197,252
---------- ---------- -------- -------- ---------- ---------- ----------
Contributions and deferrals:
Employee deferrals 170,269 487,537 209,165 276,620 233,608 690,136 460,557
Employer contributions
Transfers 1,940,001 5,627,909 8,347 72,826 1,858,429 154,693 71,246
---------- ---------- -------- -------- ---------- ---------- ----------
2,110,270 6,115,446 217,512 349,446 2,092,037 844,829 531,803
---------- ---------- -------- -------- ---------- ---------- ----------
Total additions 2,224,533 6,500,081 211,775 439,449 2,357,246 1,081,232 729,055
---------- ---------- -------- -------- ---------- ---------- ----------
Deductions from net assets
attributable to:
Distributions to
participants 85,804 231,655 6,581 46,826 105,585 60,996 43,794
Administrative expenses 348 948 21 32 359 74 59
Transfers 937 5,459
Transfers plan mergers 2,420,350 5,137,337 301,936 626,314 2,134,411 1,517,997 1,315,762
---------- ---------- -------- -------- ---------- ---------- ----------
Total deductions 2,506,502 5,369,940 309,475 673,172 2,240,355 1,579,067 1,365,074
---------- ---------- -------- -------- ---------- ---------- ----------
Interfund transfers 279,666 (1,138,758) 93,930 228,365 (121,074) 484,591 627,426
---------- ---------- -------- -------- ---------- ---------- ----------
Decrease in net assets (2,303) (8,617) (3,770) (5,358) (4,183) (13,244) (8,593)
Net assets, beginning
of year 2,303 8,617 3,770 5,358 4,183 13,244 8,593
---------- ---------- -------- ------- ---------- ---------- ----------
Net assets, end of year $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
========== ========== ======== ======= ========== ========== ==========
<PAGE>
16
Non-Participant
Directed
RTN.A GMH Raytheon
Wasting Wasting Loan Common
Fund Fund Fund Stock Fund Total
<S> <C> <C> <C> <C> <C>
Additions to net assets
attributable to:
Investment income:
Net appreciation
(depreciation) of
investments $ 20,270 $ 474,057 $ 2,193 $ 1,071,553
Interest & Dividends $ 50,896 757,891
---------- ----------- ---------- -------- -----------
20,270 474,057 50,896 2,193 1,829,444
---------- ----------- ---------- -------- -----------
Contributions and deferrals:
Employee deferrals 2,527,892
Employer contributions 922,490 922,490
Transfers 1,754,018 1,985,775 727,507 7,977 14,208,728
---------- ---------- ---------- -------- -----------
1,754,018 1,985,775 727,507 930,467 17,659,110
---------- ---------- ---------- -------- -----------
Total additions 1,774,288 2,459,832 778,403 932,660 19,488,554
---------- ---------- ---------- -------- -----------
Deductions from net assets
attributable to:
Distributions to
participants 81,677 124,977 45,827 15,728 849,450
Administrative expenses 427 706 21 2,995
Transfers 4,116 4,833 5,737 21,082
Transfers plan mergers 1,434,544 1,903,140 987,221 897,985 18,676,997
---------- ---------- ---------- -------- -----------
Total deductions 1,520,764 2,033,656 1,033,048 919,471 19,550,524
---------- ---------- ---------- -------- -----------
Interfund transfers (253,524) (426,176) 254,645 (29,091) -
---------- ---------- ---------- -------- -----------
Decrease in net assets - - - (15,902) (61,970)
Net assets, beginning
of year - - - 15,902 61,970
---------- ---------- ---------- -------- -----------
Net assets, end of year $ 0 $ 0 $ 0 $ 0 $ 0
========== ========== ========== ======== ===========
</TABLE>
<PAGE>
17
J. Master Trust:
All plan investments are included under the Master Trust. At December 31,
1998, assets of the Plan represented 0% of the total assets under the Master
Trust. This has decreased from .002% at December 31, 1997.
The following is a summary of net assets available for plan benefits by
fund under the Master Trust as of December 31, 1998:
<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* $ 473,258,791
Prudential Life Insurance
Company of America 236,989,116
Metropolitan Life
Insurance Company* 594,847,154
Fidelity 25,803,449
Connecticut General 6,538,482
Monumental Life Insurance
Company 6,869,338
At fair value:
Fidelity Equity Income
Fund* $1,464,615,296
Raytheon Company Common
Stock Fund* $ 799,542,751
BT Pyramid Equity
Index Fund* $ 745,602,791
Fidelity Balanced Fund* $ 442,796,289
Fidelity Magellan Fund* $ 379,680,454
Fidelity Blue Chip Fund*
Templeton Foreign I Fund
Fidelity Investment Grade
Bond Fund
Fidelity Retirement
Money Market
Vanguard Winsor
Vanguard Wellesley
TRP Small Cap Stock
Raytheon Class A Wasting
Stock Fund
Raytheon GMH Wasting
Stock Fund
Loans receivable from
participants
-------------- -------------- -------------- -------------- -------------- --------------
Total investments 1,344,306,330 1,464,615,296 799,542,751 745,602,791 442,796,289 379,680,454
-------------- -------------- -------------- -------------- -------------- --------------
Receivables:
Employer contribution
Accrued investment income
and other receivables 4,748,948 1,573,604
Transfer receivables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803
Cash and cash equivalents 123,969,201 11,004,025 3,330,147
-------------- -------------- -------------- -------------- -------------- --------------
Total assets 2,048,537,201 2,226,757,712 1,255,380,751 967,248,229 755,173,618 616,369,257
-------------- -------------- -------------- -------------- -------------- --------------
Liabilities:
Payable for outstanding
purchases 1,932,125
Accrued expenses and
other payables 1,853,618 844,977
Transfer payables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803
-------------- -------------- -------------- -------------- -------------- --------------
Total liabilities 580,261,670 762,142,416 443,870,770 217,586,664 312,377,329 236,688,803
-------------- -------------- -------------- -------------- -------------- --------------
Net assets available for
plan benefits $1,468,275,531 $1,464,615,296 $ 811,509,981 $ 749,661,565 $ 442,796,289 $ 379,680,454
============== ============== ============== ============== ============== ==============
<PAGE>
18
Templeton Investment Retirement Vanguard Vanguard
Blue Chip Foreign I Grade Money Winsor Wellesley
Fund Fund Bond Fund Market Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust*
Prudential Life Insurance
Company of America
Metropolitan Life
Insurance Company*
Fidelity
Connecticut General
Monumental Life Insurance
Company
At fair value:
Fidelity Equity Income
Fund*
Raytheon Company Common
Stock Fund*
BT Pyramid Equity
Index Fund*
Fidelity Balanced Fund*
Fidelity Magellan Fund*
Fidelity Blue Chip Fund* $ 391,787,509
Templeton Foreign I Fund $ 6,966,704
Fidelity Investment Grade
Bond Fund $ -
Fidelity Retirement
Money Market $ 13,202,524
Vanguard Winsor $ 41
Vanguard Wellesley $ 18
TRP Small Cap Stock
Raytheon Class A Wasting
Stock Fund
Raytheon GMH Wasting
Stock Fund
Loans receivable from
participants
-------------- -------------- -------------- ------------- ------------- --------------
Total investments 391,787,509 6,966,704 - 13,202,524 41 18
-------------- -------------- -------------- ------------- ------------- --------------
Receivables:
Employer contribution 3,595,261
Accrued investment income
and other receivables
Transfer receivables 191,269,141 6,966,652 16,715,590
Cash and cash equivalents
-------------- -------------- -------------- ------------- ------------- --------------
Total assets 583,056,650 13,933,356 - 33,513,375 41 18
-------------- -------------- -------------- ------------- ------------- --------------
Liabilities:
Payable for outstanding
purchases
Accrued expenses and
other payables
Transfer payables 191,269,141 6,966,652 16,715,590
-------------- -------------- -------------- ------------- ------------- --------------
Total liabilities 191,269,141 6,966,652 - 16,715,590 - -
-------------- -------------- -------------- ------------- ------------- --------------
Net assets available for
plan benefits $ 391,787,509 6,966,704 $ - $ 16,797,785 $ 41 $ 18
============== ============== ============== ============== ============== ==============
<PAGE>
19
TRP Small RTN.A GMH
Cap Stock Wasting Wasting Loan
Fund Fund Fund Fund Other(1) Total
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $ 473,258,791
Prudential Life Insurance
Company of America 236,989,116
Metropolitan Life
Insurance Company* 594,847,154
Fidelity 25,803,449
Connecticut General 6,538,482
Monumental Life Insurance
Company 6,869,338
At fair value:
Fidelity Equity Income
Fund* 1,464,615,296
Raytheon Company Common
Stock Fund* 799,542,751
BT Pyramid Equity
Index Fund* 745,602,791
Fidelity Balanced Fund* 442,796,289
Fidelity Magellan Fund* 379,680,454
Fidelity Blue Chip Fund* 391,787,509
Templeton Foreign I Fund 6,966,704
Fidelity Investment Grade
Bond Fund -
Fidelity Retirement
Money Market 13,202,524
Vanguard Winsor 41
Vanguard Wellesley 18
TRP Small Cap Stock $ 348 348
Raytheon Class A Wasting
Stock Fund $ 116,129,149 116,129,149
Raytheon GMH Wasting
Stock Fund $ 172,859,819 172,859,819
Loans receivable from
participants $ 250,687,865 250,687,865
-------------- -------------- -------------- -------------- ------------- --------------
Total investments 348 116,129,149 172,859,819 250,687,865 - 6,128,177,888
-------------- -------------- -------------- -------------- ------------- --------------
Receivables:
Employer contribution 3,595,261
Accrued investment income
and other receivables 1,193,397 23,640 7,539,589
Transfer receivables 120,761,325 178,295,618 117,046,618 $ 855,826,675 4,035,178,551
Cash and cash equivalents 3,480,490 5,474,220 147,258,083
-------------- -------------- -------------- ------------- -------------- --------------
Total assets 348 241,564,361 356,653,297 367,734,483 855,826,675 10,321,749,372
-------------- -------------- -------------- ------------- -------------- --------------
Liabilities:
Payable for outstanding
purchases 1,932,125
Accrued expenses and
other payables 41,711 62,061 2,802,367
Transfer payables 120,761,325 178,295,618 117,046,618 3,179,351,876
-------------- -------------- -------------- ------------- -------------- --------------
Total liabilities - 120,803,036 178,357,679 117,046,618 - 3,184,086,368
-------------- -------------- -------------- ------------- -------------- --------------
Net assets available for
plan benefits $ 348 $120,761,325 $ 178,295,618 $ 250,687,865 $ 855,826,675 $7,137,663,004
============== ============== ============== ============== ============== ==============
Percentage of Master Trust that are Plan assets - 0.00%
*Represent more than 5% of net assets available for plan benefits
(1) Other represents Raytheon plans merging in from outside the Master Trust.
Note: Not all funds within the Master Trust are available options to
participants in the Plan.
</TABLE>
<PAGE>
20
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, 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:
Investments:
At contract value:
Bankers Trust* $351,035,073
Prudential Life 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 Fund* $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
============ ============ ============ ============ ============ ===========
<PAGE>
21
Templeton Investment Retirement
Blue Chip Foreign I Grade Money Loan
Fund Fund Bond Fund Market Fund Fund Total
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments:
At contract value:
Bankers Trust* $351,035,073
Prudential Life 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 Fund* 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 - 0.002%
*Represent more than 5% of net assets available for plan benefits
Note: Not all funds within the Master Trust are available options to
participants in the Plan.
</TABLE>
<PAGE>
22
J. Master Trust, Continued:
The following is a summary of investment income by fund under the Master Trust
for the year ended December 31, 1998:
<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>
Investment income:
Net appreciation
(depreciation) of assets $ 30,695 $ 49,019,748 $74,202,083 $149,571,006 $16,091,158 $62,195,801
Interest & Dividends 81,886,632 86,279,682 1,792 42,537,357 13,255,763
----------- ------------ ----------- ------------ ----------- -----------
Total investment
income/(loss) $81,917,327 $135,299,430 $74,203,875 $149,571,006 $58,628,515 $75,451,564
=========== ============ =========== ============ =========== ===========
<PAGE>
23
Templeton Investment Retirement Vanguard Vanguard
Blue Chip Foreign I Grade Money Winsor Wellesley
Fund Fund Bond Fund Market Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Net appreciation
(depreciation) of assets $60,264,181 $(1,095,980) $ 17,635 $2,864,378 $1,379,950
Interest & Dividends 13,550,491 752,610 162,858 $ 349,740
----------- ----------- -------- ---------- ---------- ----------
Total investment
income/(loss) $73,814,672 $ (343,370) $180,493 $ 349,740 $2,864,378 $1,379,950
=========== =========== ======== ========== ========== ==========
<PAGE>
24
TRP Small RTN.A GMH
Cap Stock Wasting Wasting Loan
Fund Fund Fund Fund Total
Investment income:
Net appreciation
(depreciation) of assets $ 15 $ (35,268) $44,604,025 $459,109,427
Interest & Dividends $15,334,403 254,111,328
----------- ---------- ----------- ----------- ------------
Total investment
income/(loss) $ 15 $ (35,268) $44,604,025 $15,334,403 $713,220,755
=========== ========== =========== =========== ============
</TABLE>
<PAGE>
1
EXHIBIT 99.10a
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (File No. 333-56117) of Raytheon Company of our report
dated June 4, 1999 relating to the financial statements of the Raytheon Savings
and Investment Plan (10014), which appears in this Form 10-K/A.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 29, 1999
