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, 1995
/ / 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 1-2833
RAYTHEON COMPANY
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 04-1760395
(State or Other Jurisdiction of I.R.S. Employer Identification No.)
Incorporation or Organization)
141 SPRING STREET, LEXINGTON, MASSACHUSETTS 02173
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (617) 862-6600
The sole purpose of this Form 10-K/A is to file Annual Reports
on Form 11-K for Raytheon's various Savings and Investment Plans.
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this
amendment to be signed on its behalf by the undersigned,
thereunto duly authorized.
RAYTHEON COMPANY (REGISTRANT)
/s/ Thomas D. Hyde
BY Thomas D. Hyde, Vice President -
General Counsel for Registrant
DATE June 27, 1996
<PAGE> 1
EXHIBIT INDEX
Exhibit No. Exhibit
(99.1) Annual Report for the Raytheon Savings and Investment Plan
(99.1a) Consent of Independent Public Accountants
(99.1b) Raytheon Savings and Investment Plan
(99.2) Annual Report for the Raytheon Savings and Investment
Plan for Specified Hourly Payroll Employees
(99.2a) Consent of Independent Public Accountants
(99.2b) Raytheon Savings and Investment Plan for Specified Hourly
Payroll Employees
(99.3) Annual Report for the Raytheon Employee Savings
and Investment Plan
(99.3a) Consent of Independent Public Accountants
(99.3b) Raytheon Employee Savings and Investment Plan
<PAGE>
1
EXHIBIT 99.1
RAYTHEON SAVINGS AND INVESTMENT PLAN
FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
RAYTHEON SAVINGS AND INVESTMENT PLAN
The supplemental schedules required to accompany the Plan's Form 5500 are not
required since the plan's assets are held in a Master Trust. Accordingly,
detailed financial information, including the supplemental schedules, must be
filed separately with the Department of Labor by the plan administrator.
<PAGE>
2
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Raytheon Company:
We have audited the accompanying statements of net assets available for plan
benefits of the Raytheon Savings and Investment Plan as of December 31, 1995 and
1994, and the related statements of changes in net assets available for plan
benefits for each of the three years in the period ended December 31, 1995.
These financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the
Raytheon Savings and Investment Plan as of December 31, 1995 and 1994, and the
changes in net assets available for plan benefits for each of the three years in
the period ended December 31, 1995 in conformity with generally accepted
accounting principles.
Boston, Massachusetts
May 31, 1996
<PAGE>
3
RAYTHEON SAVINGS AND INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
as of December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Assets:
Investments, at contract value (Note E) $ 810,670,602 $ 830,410,922
Investments, at fair value (Notes B, F and I) 1,127,581,727 760,011,010
Receivables:
Accrued investment income 24,795 13,932
Employee deferrals 589,407 588,985
Employer contributions 249,816 98,071
Cash and cash equivalents 13,690,741 16,762,245
------------------ ------------------
Total assets 1,952,807,088 1,607,885,165
------------------ ------------------
Liabilities:
Payable for outstanding purchases - 347,114
Forfeitures 1,067,078 234,864
Accrued expenses 76,604 117,587
------------------ ------------------
Total liabilities 1,143,682 699,565
Net assets available for plan benefits $ 1,951,663,406 $ 1,607,185,600
================== ==================
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
4
RAYTHEON SAVINGS AND INVESTMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS
for the years ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Additions to net assets attributable to:
Investment income (Notes B, E, and I):
Change in net appreciation (depreciation) of
investments $ 209,513,350 $ (39,593,551) $ 72,981,693
Interest 54,815,858 49,579,590 53,392,853
Dividends 18,280,195 14,920,211 11,541,168
Capital gains distributions 14,503,648 19,613,629 3,654,767
---------------- ---------------- ---------------
297,113,051 44,519,879 141,570,481
---------------- ---------------- ---------------
Contributions and deferrals:
Employee deferrals 151,456,498 162,552,459 126,712,499
Employer contributions 41,708,505 43,924,642 42,388,170
Transfers in (Note G) 984,338 5,298,802 79,062,947
Other additions, net (Note H) 773,354 - 273,041
---------------- ---------------- ---------------
194,922,695 211,775,903 248,436,657
---------------- ---------------- ---------------
Total additions 492,035,746 256,295,782 390,007,138
---------------- ---------------- ---------------
Deductions from net assets attributable to:
Benefits to and withdrawals by participants 144,451,155 91,837,674 80,645,596
Administrative expenses 920,123 766,198 1,037,630
Transfers out (Note G) - 731,646 3,343,676
Other deductions, net (Note H) 2,186,662 5,303,214 -
---------------- ---------------- ---------------
Total deductions 147,557,940 98,638,732 85,026,902
---------------- ---------------- ---------------
Increase in net assets 344,477,806 157,657,050 304,980,236
Net assets, beginning of year 1,607,185,600 1,449,528,550 1,144,548,314
---------------- ---------------- ---------------
Net assets, end of year $ 1,951,663,406 $ 1,607,185,600 $ 1,449,528,550
================ ================ ===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
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 agreement for a complete description of the Plan's
provisions. The Plan is a defined contribution plan covering certain
employees of Raytheon Company (the "Company"). To participate in the
Plan, eligible employees must have three months of service and may enter
the Plan only on the first day of each month. The purpose of the Plan is
to provide participants with a tax-effective means of meeting both short
and long-term investment objectives. The Plan is intended to be a
"qualified cash or deferred arrangement" under Sections 401(a) and 401(k)
of the Internal Revenue Code (the "Code"). The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974
(ERISA). The total number of participants in the Plan as of December 31,
1995 and 1994 were 52,859 and 40,120, respectively. Participants by fund
were as follows as of December 31, 1995:
Guaranteed Income Fund 29,065
Equity Fund 22,468
Raytheon Common Stock Fund 19,436
Stock Index Fund 15,022
Balanced Fund 9,300
Effective July 31, 1992, the Plan's investments were combined with the
investments of other similar defined contribution plans of Raytheon
Company and Subsidiaries Consolidated 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.
Contributions and Deferrals
Eligible employees were allowed to defer to the Plan up to 17% of their
salaries effective January 1, 1994. The Company contributes amounts equal
to 50% of each participant's deferral, up to a maximum of 3% of the
participant's salary. As of December 31, 1995, the annual employee
deferral for a participant cannot exceed $9,240. Rollover contributions
from other qualified plans are accepted by the Plan. Participants may
invest their deferrals in increments of 1% in any combination of five
funds: (a) a Guaranteed Income Fund under which assets are invested
primarily in contracts providing for fixed rates of interest for
specified periods of time, (b) an Equity Fund which invests in shares of
a mutual fund which consists primarily of income-producing equity
securities, (c) a Raytheon Common Stock Fund which invests in shares of
Raytheon Company 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, and (e) a Balanced Fund which invests in
shares of a mutual fund which consists primarily of equity securities,
bonds and money market instruments. Dividends and distributions from
investments
<PAGE>
6
of the Raytheon Common Stock Fund, the Equity Fund and the Balanced 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 occurs upon completion of a
certain period of service 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.
Benefits and Withdrawals
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 to January of the following year.
Loans to Participants
A participant may borrow against a portion of the balance in the
participant's account, subject to certain restrictions. The maximum
amount of a loan is the lesser of one-half (1/2) of the participant's
vested account balance or $50,000. The minimum loan which may be granted
is $500. The interest rate applied is equal to the prime rate published
in the WALL STREET JOURNAL on the first business day in June and December
of each year. Loans must be repaid over a period of up to five years by
means of payroll deductions. In certain cases, the repayment period may
be extended up to 15 years. Interest paid to the Plan on loans to
participants is credited to the borrower's account in the investment fund
to which repayments are made.
Administrative Expenses
Substantially all expenses of administering the Plan are paid by the Plan
participants.
<PAGE>
7
B. Summary of Significant Accounting Policies:
------------------------------------------
The Plan's investment contracts are valued at their contract value,
defined as net contributions and deferrals plus interest earned on the
underlying investments at contracted rates, which 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.
Security transactions are recorded on trade date. Except for its
investment contracts (Note E), the Plan's investments are held by bank-
administered trust funds. Payables for outstanding security transactions
represent trades which have occurred but have not yet settled.
The Plan presents in the statement of changes in net assets the net
appreciation (depreciation) in the fair value of its investments which
consists of the realized gains or losses and the unrealized appreciation
(depreciation) on those investments.
Dividend income is recorded on the ex-dividend date. Income from other
investments is recorded as earned on an accrual basis.
Benefits are recorded when paid.
Certain items in the 1994 financial statements have been reclassified to
conform to the 1995 presentation.
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
the disclosure of contingent assets and liabilities as of December 31,
1995 and 1994, as well as the reported amounts of revenues and expenses
during the three years ended December 31, 1995. Actual results could
differ from the estimates included in the financial statements.
C. Federal Income Tax Status:
-------------------------
The Plan obtained its latest determination letter in July 1995, in which
the Internal Revenue Service stated that the Plan, as submitted, was in
compliance with the applicable requirements of the Internal Revenue Code.
The Plan has been amended since receiving the determination letter.
However, the plan administrator and the Plan's legal counsel believe that
the Plan is currently designed and being operated in compliance with the
applicable requirements of the Internal Revenue Code. Therefore, no
provision for income taxes has been included in the Plan's financial
statements.
<PAGE>
8
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, the participant will become 100%
vested in their account balances including Company contributions.
E. Investment Contracts:
The Plan holds three collateralized fixed income investment portfolios
(with no expiration date), two of which are managed by insurance
companies and one of which is managed by an investment management firm.
The credited interest rates are adjusted semiannually to reflect the
experienced and anticipated yields to be earned on such investments,
based on their book value. The average yield and credited interest rates
were as follows:
Credited
Average Yield Interest Rate
------------- -------------
For the year ended 12/31/95:
Banker's Trust 6.67% 6.84%
Metropolitan Life Insurance Company 6.46% 6.61%
Prudential Asset Management Company 6.88% 6.86%
For the year ended 12/31/94:
Banker's Trust 6.19% 6.37%
Metropolitan Life Insurance Company 6.26% 6.22%
Prudential Asset Management Company 6.91% 6.89%
The contract values are subject to limitations in certain situations
including large work force reductions and Plan termination.
F. Related Party Transactions:
In accordance with the provisions of the Plan, Fidelity Management Trust
Company (the "Trustee") acts as the Plan's agent for purchases and sales
of shares of Raytheon Company Common Stock. For the years ended December
31, 1995, 1994 and 1993, purchases of Raytheon Company Common Stock
amounted to $47,055,935, $16,302,923 and $14,610,207, respectively. Sales
of Raytheon Company Common Stock amounted to $5,776,535, $4,095,868 and
$2,942,959 in 1995, 1994 and 1993, respectively.
<PAGE>
9
G. Plan Transfers:
Effective July 27, 1995, the accounts of certain employees of Standard
Havens, Inc. who participated in the Standard Havens 401K Plan were
transferred into the Plan.
Effective March 16, 1995, the accounts of certain employees of Harbert
Yeargin, Inc. who participated in the Raytheon Employee Savings and
Investment Plan were transferred into the Plan.
Effective February 23, 1995, the accounts of certain employees of Amana
Refrigeration, Inc. who participated in the Raytheon Employee Savings and
Investment Plan were transferred into the Plan.
Effective September 23, 1994 and December 22, 1994, all plan assets and
the accounts of all participants of the Arkansas Aerospace, Inc. Employee
Retirement Savings Plan and the United Engineers & Constructors, Inc.
Profit Sharing Plan, respectively, were transferred into the Plan.
Effective May 4, 1994, the accounts of all employees of NASA Logistics
Support Services who participated in the Plan were transferred out of the
Plan and into the Raytheon Employee Savings and Investment Plan.
Effective February 10, 1994, the accounts of certain employees of Caloric
Corporation who participated in the Raytheon Subsidiary Savings and
Investment Plan were transferred into the Plan.
H. Other Additions and Deductions:
------------------------------
Other additions and deductions include transfers of participant accounts
between the Raytheon Savings and Investment Plan and the Raytheon Savings
and Investment Plan for Specified Hourly Payroll Employees, the Raytheon
Employee Savings and Investment Plan and the Raytheon Savings and
Investment Plan for Puerto Rico Based Employees for those participants
who changed plans during the year.
<PAGE>
10
I. Fund Data:
The following is a summary of net assets available for plan benefits by
fund as of December 31:
<TABLE>
<CAPTION>
1995
------------------------------------------------------------------------
Raytheon
Guaranteed Common Stock
Income Fund Equity Fund Stock Fund Index Fund
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Assets:
Investments, at contract value:
Bankers Trust $ 306,858,393
Prudential Insurance Company of America 196,438,052
Metropolitan Life Insurance Company 307,374,157
Investments, at fair value:
Fidelity Equity Income Fund (11,408,442 shares) - $ 432,722,189
Raytheon Company Common Stock (6,118,058 shares) - - $ 289,078,240
BT Pyramid Equity Index Fund (149,865 shares) - - - $ 205,118,234
Fidelity Balanced Fund (7,084,841 shares) - - - -
Loans receivable from participants - - - -
--------------- --------------- --------------- --------------
Total investments 810,670,602 432,722,189 289,078,240 205,118,234
Receivables:
Accrued investment income - - 14,697 10,098
Employee deferrals 251,216 200,883 (72,139) 127,218
Employer contributions 79,118 60,199 46,494 38,573
Cash and cash equivalents 9,291,835 - 2,333,118 2,065,788
--------------- --------------- --------------- --------------
Total assets 820,292,771 432,983,271 291,400,410 207,359,911
Liabilities:
Forfeitures 1,063,745 33 1,634 1,666
Accrued expenses - - - 76,604
--------------- --------------- --------------- --------------
Total liabilities 1,063,745 33 1,634 78,270
--------------- --------------- --------------- --------------
Net assets available for plan benefits $ 819,229,026 $ 432,983,238 $ 291,398,776 $ 207,281,641
=============== =============== =============== ==============
<CAPTION>
Balanced
Fund Loan Fund Total
--------------- --------------- ---------------
<S> <C> <C> <C>
Assets:
Investments, at contract value:
Bankers Trust $ 306,858,393
Prudential Insurance Company of America 196,438,052
Metropolitan Life Insurance Company 307,374,157
Investments, at fair value:
Fidelity Equity Income Fund (9,954,116 shares) 432,722,189
Raytheon Company Common Stock (2,239,615 shares) 289,078,240
BT Pyramid Equity Index Fund (112,661 shares) 205,118,234
Fidelity Balanced Fund (7,978,970 shares) $ 95,787,056 95,787,056
Loans receivable from participants - $ 104,876,008 104,876,008
--------------- --------------- ---------------
Total investments 95,787,056 104,876,008 1,938,252,329
Receivables:
Accrued investment income - 24,795
Employee deferrals 82,229 589,407
Employer contributions 25,432 249,816
Cash and cash equivalents - - 13,690,741
--------------- --------------- ---------------
Total assets 95,894,717 104,876,008 1,952,807,088
Liabilities:
Forfeitures - - 1,067,078
Accrued expenses - - 76,604
--------------- --------------- ---------------
Total liabilities - - 1,143,682
--------------- --------------- ---------------
Net assets available for plan benefits $ 95,894,717 $ 104,876,008 1,951,663,406
=============== =============== ===============
</TABLE>
<PAGE>
11
I. Fund Data, Continued:
--------------------
The following is a summary of net assets available for plan benefits by
fund as of December 31:
<TABLE>
<CAPTION>
1994
------------------------------------------------------------------------
Raytheon
Guaranteed Common Stock
Income Fund Equity Fund Stock Fund Index Fund
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Assets:
Investments, at contract value:
Bankers Trust $ 314,605,021
Prudential Insurance Company of America 202,637,978
Metropolitan Life Insurance Company 313,167,923
Investments, at fair value:
Fidelity Equity Income Fund (9,954,116 shares) - $ 305,591,359
Raytheon Company Common Stock (2,239,615 shares) - - $ 143,055,435
BT Pyramid Equity Index Fund (112,661 shares) - - - $ 112,930,945
Fidelity Balanced Fund (7,978,970 shares) - - - -
Loans receivable from participants - - - -
--------------- --------------- --------------- --------------
Total investments 830,410,922 305,591,359 143,055,435 112,930,945
Receivables:
Accrued investment income - - 8,123 5,809
Employee deferrals 216,241 50,050 55,173 244,789
Employer contributions 59,510 14,543 11,511 6,617
Cash and cash equivalents 13,656,409 - 1,875,901 1,229,935
--------------- --------------- --------------- --------------
Total assets 844,343,082 305,655,952 145,006,143 114,418,095
Liabilities:
Payable for outstanding purchases - - 347,114 -
Forfeitures 230,252 3,234 609 618
Accrued expenses 64,628 21,988 11,621 11,835
--------------- --------------- --------------- --------------
Total liabilities 294,880 25,222 359,344 12,453
--------------- --------------- --------------- --------------
Net assets available for plan benefits $ 844,048,202 $ 305,630,730 $ 144,646,799 $ 114,405,642
=============== =============== =============== ==============
<CAPTION>
Balanced
Fund Loan Fund Total
--------------- --------------- ---------------
<S> <C> <C> <C>
Assets:
Investments, at contract value:
Bankers Trust $ 314,605,021
Prudential Insurance Company of America 202,637,978
Metropolitan Life Insurance Company 313,167,923
Investments, at fair value:
Fidelity Equity Income Fund (9,954,116 shares) 305,591,359
Raytheon Company Common Stock (2,239,615 shares) 143,055,435
BT Pyramid Equity Index Fund (112,661 shares) 112,930,945
Fidelity Balanced Fund (7,978,970 shares) $ 98,061,542 98,061,542
Loans receivable from participants - $ 100,371,729 100,371,729
--------------- --------------- ---------------
Total investments 98,061,542 100,371,729 1,590,421,932
Receivables:
Accrued investment income - 13,932
Employee deferrals 22,732 588,985
Employer contributions 5,890 98,071
Cash and cash equivalents - - 16,762,245
--------------- --------------- ---------------
Total assets 98,090,164 100,371,729 1,607,885,165
Liabilities:
Payable for outstanding purchases - - 347,114
Forfeitures 151 - 234,864
Accrued expenses 7,515 - 117,587
--------------- --------------- ---------------
Total liabilities 7,666 - 699,565
--------------- --------------- ---------------
Net assets available for plan benefits $ 98,082,498 $ 100,371,729 1,607,185,600
=============== =============== ===============
</TABLE>
<PAGE>
12
I. Fund Data, Continued:
The following is a summary of changes in net assets available for plan
benefits by fund as of December 31:
<TABLE>
<CAPTION>
1995
--------------------------------------------------------------------------------------------------
Raytheon
Guaranteed Common Stock Balanced
Income Fund Equity Fund Stock Fund Index Fund Fund Loan Fund Total
------------- ------------- ------------- ------------- ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Change in net appreciation
(depreciation) of investments $ 74,689,701 $ 78,030,182 $ 47,653,246 $ 9,140,221 $209,513,350
Interest $ 54,515,460 - 179,802 120,596 - 54,815,858
Dividends - 10,112,656 3,987,636 - 4,179,903 18,280,195
Capital gains distributions - 14,503,648 - - - 14,503,648
------------- ------------- ------------- ------------- ------------- ------------ ---------------
54,515,460 99,306,005 82,197,620 47,773,842 13,320,124 297,113,051
Contributions and deferrals:
Employee deferrals 59,592,456 34,892,009 20,626,310 21,112,881 15,232,842 151,456,498
Employer contributions 16,967,355 9,635,103 5,632,520 5,439,364 4,034,163 41,708,505
Transfers in 728,088 54,373 48,034 59,515 94,328 984,338
Other additions, net 98,672 226,713 130,975 105,025 211,969 773,354
------------- ------------- ------------- ------------- ------------- ------------ ---------------
77,386,571 44,808,198 26,437,839 26,716,785 19,573,302 194,922,695
------------- ------------- ------------- ------------- ------------- ------------ ---------------
Total additions 131,902,031 144,114,203 108,635,459 74,490,627 32,893,426 492,035,746
Deductions from net assets attributable to:
Benefits to and withdrawals
by participants 92,037,218 23,944,050 12,107,607 9,352,123 7,010,157 144,451,155
Administrative expenses 443,962 183,955 156,040 85,597 50,569 920,123
Other deductions, net (829,678) (230,566) (160,711) (150,442) (78,448) $ 3,636,507 2,186,662
------------- ------------- ------------- ------------- ------------- ------------ ---------------
Total deductions 91,651,502 23,897,439 12,102,936 9,287,278 6,982,278 3,636,507 147,557,940
------------- ------------- ------------- ------------- ------------- ------------ ---------------
Interfund transfers (65,069,705) 7,135,744 50,219,454 27,672,650 (28,098,929) 8,140,786 -
------------- ------------- ------------- ------------- ------------- ------------ ---------------
Increase in net assets (24,819,176) 127,352,508 146,751,977 92,875,999 (2,187,781) 4,504,279 344,477,806
------------- ------------- ------------- ------------- ------------- ------------ ---------------
Net assets, beginning of year 844,048,202 305,630,730 144,646,799 114,405,642 98,082,498 100,371,729 1,607,185,600
------------- ------------- ------------- ------------- ------------- ------------ ---------------
Net assets, end of year $819,229,026 $432,983,238 $291,398,776 $207,281,641 $95,894,717 $104,876,008 $1,951,663,406
============= ============= ============= ============= ============= ============ ===============
</TABLE>
<PAGE>
13
I. Fund Data, Continued:
The following is a summary of changes in net assets available for plan
benefits by fund as of December 31:
<TABLE>
<CAPTION>
1994
--------------------------------------------------------------------------------------------------
Raytheon
Guaranteed Common Stock Balanced
Income Fund Equity Fund Stock Fund Index Fund Fund Loan Fund Total
------------- ------------- ------------- ------------- ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributable to:
Investment income:
Change in net appreciation
(depreciation) of investments - $(28,144,544) $(4,277,949) $ 1,608,385 $ (8,779,443) $ (39,593,551)
Interest $ 49,473,928 - 63,832 41,830 - 49,579,590
Dividends - 8,724,691 3,071,862 - 3,123,658 14,920,211
Capital gains distributions - 19,613,629 - - - 19,613,629
------------- ------------- ------------- ------------ ------------ ----------- ------------
49,473,928 193,776 (1,142,255) 1,650,215 (5,655,785) 44,519,879
Contributions and deferrals:
Employee deferrals 63,091,604 37,682,458 18,050,220 20,349,293 23,378,884 162,552,459
Employer contributions 18,681,778 9,934,779 5,005,943 5,098,091 5,204,051 43,924,642
Transfers in 2,039,388 995,506 958,399 594,949 710,560 5,298,802
------------- ------------- ------------- ------------- ------------- ------------ --------------
83,812,770 48,612,743 24,014,562 26,042,333 29,293,495 211,775,903
------------- ------------- ------------- ------------- ------------- ------------ --------------
Total additions 133,286,698 48,806,519 22,872,307 27,692,548 23,637,710 256,295,782
Deductions from net assets attributable to:
Benefits to and withdrawals
by participants 62,672,646 13,388,206 7,312,787 4,402,201 4,061,834 91,837,674
Administrative expenses 449,892 142,534 67,300 53,948 52,524 766,198
Transfers out 384,350 71,461 226,923 21,384 27,528 731,646
Other deductions, net 677,495 420,009 203,287 126,048 46,067 $ 3,830,308 5,303,214
------------- ------------- ------------- ------------- ------------- ------------ --------------
Total deductions 64,184,383 14,022,210 7,810,297 4,603,581 4,187,953 3,830,308 98,638,732
------------- ------------- ------------- ------------- ------------- ------------ ---------------
Interfund transfers (24,267,229) 8,601,957 3,713,753 (4,188,626) 3,017,811 13,122,334 -
------------- ------------- ------------- ------------- ------------- ------------ ---------------
Increase in net assets 44,835,086 43,386,266 18,775,763 18,900,341 22,467,568 9,292,026 157,657,050
------------- ------------- ------------- ------------- ------------- ------------ ---------------
Net assets, beginning of year 799,213,116 262,244,464 125,871,036 95,505,301 75,614,930 91,079,703 1,449,528,550
------------- ------------- ------------- ------------- ------------- ------------ ---------------
Net assets, end of year $844,048,202 $305,630,730 $144,646,799 $114,405,642 $98,082,498 $100,371,729 $1,607,185,600
============= ============= ============= ============= ============= ============ ===============
</TABLE>
<PAGE>
14
<TABLE>
<CAPTION>
1993
------------------------------------------------------------------------
Raytheon
Guaranteed Common Stock
Income Fund Equity Fund Stock Fund Index Fund
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Additions to net assets attributable to:
Investment income:
Change in net appreciation (depreciation)
of investments $ 34,110,541 $ 28,867,950 $ 8,884,701
Interest $ 53,328,242 - 37,098 27,513
Dividends - 8,245,882 1,248,893 -
Capital gains distributions - 908,109 - -
--------------- --------------- --------------- ---------------
53,328,242 43,264,532 30,153,941 8,912,214
Contributions and deferrals:
Employee deferrals 68,011,711 25,062,055 8,807,394 16,159,598
Employer contributions 22,928,611 8,269,003 3,761,864 5,089,994
Transfers in 39,016,352 20,022,584 9,551,415 7,628,846
Other additions, net 3,845 102,264 51,326 33,138
--------------- --------------- --------------- ---------------
129,960,519 53,455,906 22,171,999 28,911,576
--------------- --------------- --------------- ---------------
Total additions 183,288,761 96,720,438 52,325,940 37,823,790
--------------- --------------- --------------- ---------------
Deductions from net assets attributable to:
Benefits to and withdrawals by participants 59,055,966 10,567,368 6,190,448 3,432,813
Administrative expenses 729,306 138,501 70,757 65,957
Transfers out 1,448,750 637,430 267,276 237,112
--------------- --------------- --------------- ---------------
Total deductions 61,234,022 11,343,299 6,528,481 3,735,882
--------------- --------------- --------------- ---------------
Interfund transfers (73,429,114) 10,734,624 387,381 (11,700,952)
--------------- --------------- --------------- ---------------
Increase in net assets 48,625,625 96,111,763 46,184,840 22,386,956
Net assets, beginning of year 750,587,491 166,132,701 79,686,196 73,118,345
--------------- --------------- --------------- ---------------
Net assets, end of year $ 799,213,116 $ 262,244,464 $ 125,871,036 $ 95,505,301
=============== =============== =============== ==============
<CAPTION>
Balanced
Fund Loan Fund Total
--------------- --------------- ---------------
<S> <C> <C> <C>
Additions to net assets attributable to:
Investment income:
Change in net appreciation (depreciation)
of investments $ 1,118,501 $ 72,981,693
Interest - 53,392,853
Dividends 2,046,393 11,541,168
Capital gains distributions 2,746,658 3,654,767
--------------- --------------- ---------------
5,911,552 141,570,481
Contributions and deferrals
Employee deferrals 8,671,741 126,712,499
Employer contributions 2,338,698 42,388,170
Transfers in 397,849 $ 2,445,901 79,062,947
Other additions, net 82,468 - 273,041
--------------- --------------- ---------------
11,490,756 2,445,901 248,436,657
--------------- --------------- ---------------
Total additions 17,402,308 2,445,901 390,007,138
--------------- --------------- ---------------
Deductions from net assets attributable to:
Benefits to and withdrawals by participants 1,399,001 - 80,645,596
Administrative expenses 33,109 - 1,037,630
Transfers out 324,434 428,674 3,343,676
--------------- --------------- ---------------
Total deductions 1,756,544 428,674 85,026,902
--------------- --------------- ---------------
Interfund transfers 59,969,166 14,038,895 -
--------------- --------------- ---------------
Increase in net assets 75,614,930 16,056,122 304,980,236
Net assets, beginning of year - 75,023,581 1,144,548,314
--------------- --------------- ---------------
Net assets, end of year $ 75,614,930 $ 91,079,703 $ 1,449,528,550
=============== =============== ===============
</TABLE>
<PAGE>
15
J. Master Trust:
------------
As of December 31, 1995 and 1994, all Plan investments are included under the
Master Trust. At December 31, 1995, assets of the Plan represented 79.6% of the
total assets under the Master Trust. This was down from 80.8% at December 31,
1994. The following is a summary of net assets available for plan benefits by
fund under the Master Trust as of December 31:
<TABLE>
<CAPTION>
1995
--------------------------------------------------------------------------
Guaranteed Raytheon Stock
Income Equity Common Index
Fund Fund Stock Fund Fund
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Assets:
Investments, at contract value:
Bankers Trust $ 355,570,494
Prudential Insurance Company of America 227,621,525
Metropolitan Life Insurance Company 356,168,133
Investments, at fair value:
Fidelity Equity Income Fund (12,407,312 shares) $ 470,609,321
Raytheon Company Common Stock (12,011,039 shares) $ 567,521,593
BT Pyramid Equity Index Fund (162,981 shares) $ 225,079,988
Fidelity Balanced Fund (7,645,074 shares)
Loans receivable from participants
--------------- --------------- --------------- ---------------
Total Investments 939,360,152 470,609,321 567,521,593 225,079,988
Receivables:
Accrued investment Income 28,854 11,081
Cash and cash equivalents 10,766,863 - 4,580,403 2,266,827
--------------- --------------- --------------- ---------------
Total assets 950,127,015 470,609,321 572,130,850 227,357,896
Liabilities:
Total liabilities - - - -
--------------- --------------- --------------- ---------------
Net assets available for plan benefits $ 950,127,015 $ 470,609,321 $ 572,130,850 $ 227,357,896
=============== =============== =============== ===============
Percentage of plan assets included under the Master Trust 86.3% 91.9% 50.9% 91.1%
<CAPTION>
Balanced Loan
Fund Fund Total
--------------- --------------- ---------------
<S> <C> <C> <C>
Assets:
Investments, at contract value:
Bankers Trust $ 355,570,494
Prudential Insurance Company of America 227,621,525
Metropolitan Life Insurance Company 356,168,133
Investments, at fair value:
Fidelity Equity Income Fund (12,407,312 shares) $ 470,609,321
Raytheon Company Common Stock (12,011,039 shares) $ 567,521,593
BT Pyramid Equity Index Fund (162,981 shares) $ 225,079,988
Fidelity Balanced Fund (7,645,074 shares) $ 103,361,407 $ 103,361,407
Loans receivable from participants $ 130,012,819 $ 130,012,819
--------------- --------------- ---------------
Total Investments 103,361,407 130,012,819 2,435,945,280
Receivables:
Accrued investment Income 39,935
Cash and cash equivalents - - 17,614,093
--------------- --------------- ---------------
Total assets 103,361,407 130,012,819 2,453,599,308
Liabilities:
Total liabilities - - -
--------------- --------------- ---------------
Net assets available for plan benefits $ 103,361,407 $ 130,012,819 $ 2,453,599,308
=============== =============== ===============
Percentage of plan assets included under the Master Trust 92.7% 80.7% 79.6%
</TABLE>
<PAGE>
16
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:
<TABLE>
<CAPTION>
1994
--------------------------------------------------------------------------
Guaranteed Raytheon Stock
Income Equity Common Index
Fund Fund Stock Fund Fund
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Assets:
Investments, at contract value:
Bankers Trust $ 363,462,005
Prudential Insurance Company of America 234,106,898
Metropolitan Life Insurance Company 361,801,731
Investments, at fair value:
Fidelity Equity Income Fund (10,843,663 shares) - $ 332,900,446
Raytheon Company Common Stock (5,052,810 shares) - - $ 322,748,238
BT Pyramid Equity Index Fund (123,405shares) - - - $ 123,699,986
Fidelity Balanced Fund (8,610,351 shares) - - -
Loans receivable from participants --------------- --------------- --------------- ---------------
Total Investments 959,370,634 332,900,446 322,748,238 123,699,986
Receivables:
Accrued investment Income 18,327 6,363
Cash and cash equivalents 15,777,199 4,232,020 1,347,221
--------------- --------------- --------------- ---------------
Total assets 975,147,833 332,900,446 326,998,585 125,053,570
Liabilities:
Payable for outstanding purchases - - 783,126 -
--------------- --------------- --------------- ---------------
Total liabilities - - 783,126 -
--------------- --------------- --------------- ---------------
Net assets available for plan benefits $ 975,147,833 $ 332,900,446 $ 326,215,459 $ 125,053,570
=============== =============== =============== ===============
Percentage of plan assets included under the Master Trust 86.6% 91.8% 44.3% 91.3%
<CAPTION>
Balanced Loan
Fund Fund Total
--------------- --------------- ---------------
<S> <C> <C> <C>
Assets:
Investments, at contract value:
Bankers Trust $ 363,462,005
Prudential Insurance Company of America 234,106,898
Metropolitan Life Insurance Company 361,801,731
Investments, at fair value:
Fidelity Equity Income Fund (10,843,663 shares) $ 332,900,446
Raytheon Company Common Stock (5,052,810 shares) $ 322,748,238
BT Pyramid Equity Index Fund (123,405 shares) $ 123,699,986
Fidelity Balanced Fund (8,610,351 shares) $ 105,826,958 $ 105,826,958
Loans receivable from participants $ 123,811,382 $ 123,811,382
--------------- --------------- ---------------
Total Investments 105,826,958 123,811,382 1,968,357,644
Receivables:
Accrued investment Income 24,690
Cash and cash equivalents 21,356,440
--------------- --------------- ---------------
Total assets 105,826,958 123,811,382 1,989,738,774
Utilities:
Payable for outstanding purchases - - 783,126
--------------- --------------- ---------------
Total liabilities - - 783,126
--------------- --------------- ---------------
Net assets available for plan benefits $ 105,826,958 $ 123,811,382 $ 1,988,955,648
=============== =============== ===============
Percentage of plan assets included under the Master Trust 92.7% 81.1% 80.8%
</TABLE>
<PAGE>
17
J. Master Trust, Continued:
-----------------------
<TABLE>
<CAPTION>
The following is a summary of the changes in net assets available for
plan benefits by fund under the Master Trust as of December 31:
Guaranteed Raytheon Stock
Income Equity Common Index Balanced
Fund Fund Stock Fund Fund Fund Total
------------ ------------- ------------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
1995:
Investment income:
Change in appreciation
(depreciation) of investments - $ 73,248,498 $ 148,529,866 $ 45,735,616 $ 10,504,382 $ 278,018,362
Interest $ 63,061,904 - 330,559 152,395 - 63,544,858
Dividends - 11,010,111 7,828,571 - 4,503,326 23,342,008
Capital gains and distributions - 39,117,479 - - - 39,117,479
------------ ------------- ------------- ------------- -------------- -------------
Total investment income $ 63,061,904 $ 123,376,088 $ 156,688,996 $ 45,888,011 $ 15,007,708 $ 404,022,707
============ ============= ============= ============= ============== =============
1994:
Investment income:
Change in appreciation
(depreciation) of investments (34,214,567) (17,318,026) (461,152) (7,961,156) (59,954,901)
Interest 57,046,896 - 143,416 45,820 - 57,236,132
Dividends - 9,504,997 6,930,447 - 3,364,162 19,799,606
Capital gains and distributions - 21,354,374 - - - 21,354,374
------------ ------------- ------------- ------------- -------------- --------------
Total investment income $ 57,046,896 $ (3,355,196) $(10,244,163) $ (415,332) $ (4,596,994) $ 38,435,211
============ ============= ============= ============= ============== ==============
</TABLE>
<PAGE> 1
EXHIBIT (99.1a)
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Raytheon Company:
We consent to the incorporation by reference in the Registration Statements of
Raytheon Company on Form S-8 (File No. 2-87308, No. 2-93871, No. 33-3720, No.
33-3723, No. 33-15396, No. 33-15397, No. 33-21454, No. 33-22211 and No.
33-49043) of our report dated May 31, 1996 on our audits of the financial
statements of the Raytheon Savings and Investment Plan as of December 31, 1995
and 1994 and for each of the three years in the period ended December 31, 1995,
which report is included in this annual report on Form 11-K. We also consent to
the reference to our firm under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
June 26, 1996
<PAGE>
1
EXHIBIT (99.1b)
RAYTHEON SAVINGS AND INVESTMENT PLAN
Provisions in Effect as of March 1, 1996
COMPANIES PARTICIPATING IN
RAYTHEON SAVINGS AND INVESTMENT PLAN
Raytheon Company
Raytheon Air Control Company
Raytheon Engineering and Maintenance Company
Raytheon Europe International Company
Raytheon European Management Company
Raytheon European Management and Systems Company
Raytheon Foreign Trade Company
Raytheon Gulf Systems Company
Raytheon International Support Company, Inc.
(formerly Raytheon Subsidiary Support Company, Inc.)
Raytheon Korean Support Company
Raytheon Logistics Support and Training Company
Raytheon Mediterranean Systems Company
Raytheon Middle East Systems Company
Raytheon Overseas Limited
Raytheon Peninsula Systems Company
Raytheon Service Company
Raytheon Southeast Asia Systems Company
Raytheon Systems Company
Raytheon Technical and Administration Services, Ltd.
Raytheon Technical Assistance Company
Raytheon World Services Company
Tube Holding Company, Inc. (formerly The Machlett Laboratories, Incorporated)
TAG Semiconductors Limited - Burlington, MA Office Only
Amana Refrigeration, Inc. effective 1/1/85
Speed Queen Company effective 2/1/85
Beech Acceptance Corporation, Inc. effective 1/1/86
Beech Aircraft Corporation effective 1/1/86
Beech Holdings, Inc. effective 1/1/86
Cedarapids, Inc. effective 1/1/87
Beech Aerospace Services, Inc. effective 1/1/88
Seiscor Inc. effective 1/1/88
Seismograph Service Corporation effective 1/1/88
Seismograph Service Corporation (Overseas) effective 1/1/88
Patriot Overseas Support Company effective 10/3/88
Data Logic, Inc. effective 1/1/89
Raytheon Services Nevada Company effective 11/5/90
United Engineers & Constructors International, Inc. effective 3/23/93
UE&C-Catalytic, Inc. effective 3/23/93
Stearns Catalytic Corporation effective 3/23/93
United Architects, Ltd. effective 3/23/93
UCI, Ltd. effective 3/23/93
<PAGE>
2
Stearns-Roger Export Ltd. effective 3/23/93
Catalytic Industrial Maintenance Co., Inc. effective 3/23/93
United Engineers Far East, Ltd. effective 3/23/93
Jackson & Moreland International, Inc. effective 3/23/93
U.E.&C. (Canada) Ltd. effective 3/23/93
United Engineers International, Inc. effective 3/23/93
United Mid-East, Inc. effective 3/23/93
United Engineers & Constructors of Ireland, Ltd. effective 3/23/93
UE, Inc. effective 3/23/93
Energy Overseas International, Inc. effective 3/23/93
UE&C Nuclear Inc. effective 3/23/93
United Engineers & Constructors Midwest, Inc. effective 3/23/93
United Module Fabricators, Inc. effective 3/23/93
Specialty Technical Services, Inc. effective 3/23/93
UE&C Urban Services Corporation effective 3/23/93
Stearns Catalytic Michigan, Inc. effective 3/23/93
Badger Catalytic Ltd effective 3/23/93
Asia Badger (Malaysia) Sdn Bhd effective 5/12/93
Asia Badger, Inc. (Delaware) effective 5/12/93
Badger B.V. (Netherlands) effective 5/12/93
Badger Energy, Inc. effective 5/12/93
Badger Engineering and Construction (Pty) Ltd. effective 5/12/93
Badger Africa (Pty) Ltd. effective 5/12/93
Badger Engineers & Constructors, Inc. effective 5/12/93
Badger Engineers, Inc. effective 5/12/93
Badger G.m.b.H. effective 5/12/93
Badger Italiana S.r.l. effective 5/12/93
Badger Middle East, Inc. effective 5/12/93
Badger Trading Company effective 5/12/93
Canadian Badger Company Limited effective 5/12/93
Chemical Process Corporation effective 5/12/93
Gulf Design Corporation, Inc. effective 5/12/93
McBride-Ratcliff and Associates, Inc. effective 5/12/93
Societe Francaise Badger S.a.r.l. effective 5/12/93
Raytheon-Ebasco Indonesia Ltd.
(formerly Badger Plants, Inc.) effective 5/12/93
Raytheon-Ebasco Overseas Ltd.
(formerly Badger Overseas Limited) effective 5/12/93
Raytheon Corporate Jets, Inc. effective 8/6/93
Range Systems Engineering Co. effective 10/1/93
Raytheon Constructors, Inc. effective 1/1/94
Raytheon Inernational, Inc. effective 6/1/94
Arkansas Aerospace, Inc. effective 7/1/94
Harbert-Yeargin, Inc. (non-exempt and
exempt salaried payrolls only) effective 1/1/95
Raytheon Advanced Systems Company effective 1/1/95
Raytheon Brazil Integrated Systems Company effective 1/1/95
Raytheon Systems International Company effective 1/1/95
Raytheon Tennessee Company effective 1/1/95
Raytheon Transportation Systems Company effective 1/1/95
Standard Havens Inc. effective 4/1/95
Litwin Engineers & Constructors, Inc. effective 8/1/95
Seiscor Technologies, Inc. effective 1/1/96
<PAGE>
3
ARTICLE I - PREAMBLE
The Raytheon Savings and Investment Plan (the "Plan"), which became
effective January 1, 1984, provides employees with a tax-effective means of
allocating a portion of their salary to be invested in one or more investment
opportunities specified in the Plan as determined by the employee and set aside
for short-term and long-term needs of the employee. The Plan is applicable only
to eligible employees who meet the requirements for membership on or after
January 1, 1984. It is intended that the Plan will comply with all of the
requirements for a qualified profit sharing plan under Sections 401(a) and
401(k) of the Internal Revenue Code and will be amended from time to time to
maintain compliance with these requirements. The terms used in the Plan have the
meanings specified in Article XIV unless the context indicates otherwise. The
Plan is intended to constitute a plan described in Section 404(c) of the
Employee Retirement Income Security Act and Title 29 of the Code of Federal
Regulations, Section 2550.404(c)-1. Participants in the Plan are responsible for
selecting their own investment opportunities from the options available under
the Plan and the Plan fiduciaries are relieved of any liability for any losses
which are a direct and necessary result of investment instructions given by a
participant or beneficiary.
The Plan as restated herein shall be effective as of January 1, 1994 or
such other dates as may be specifically provided herein or as otherwise required
by law for the Plan or either of the Merged Plans referred to in Section 13.6 to
satisfy the requirements of Section 401(a) of the Code. The rights of former
Employees whose Severance from Service Date occurred prior to the date of any
amendment shall be governed by the terms of the Plan in effect on their
Severance from Service Date except as otherwise provided herein.
ARTICLE II - ELIGIBILITY
2.1 Eligibility Requirements - Present Employees -- Each Eligible
Employee whose Employment Commencement Date is on or after November 1, 1983, may
join the Plan as of the first Pay Period coincident with or next following
completion of a Period of Service of three (3) consecutive months commencing on
said Employment Commencement Date. Each Eligible Employee whose Reemployment
Commencement Date is on or after November 1, 1984, may join the Plan as of the
first Pay Period next following said Reemployment Commencement Date.
2.2 Procedure for Joining the Plan -- Each Eligible Employee who meets
the requirements of Section 2.1 may join the Plan by communicating with Fidelity
in accordance with instructions in an enrollment kit which will be made
available to each Eligible Employee. An enrollment in the Plan shall not be
deemed to have been completed until the Employee has designated: a percentage by
which Participants' Eligible Compensation shall be reduced as an Elective
Deferral in accordance with the requirements of Section 3.2, subject to the
nondiscrimination test described in Section 3.3; election of investment funds as
described in Article IV; one or more Beneficiaries; and such other information
as specified by Fidelity. Enrollment will be effective as of the first
administratively feasible Pay Period following completion of enrollment. The
Administrator in its discretion may from time to time make exceptions and
adjustments in the foregoing procedure on a uniform and nondiscriminatory basis.
<PAGE>
2.3 Transfer Between Companies to Position Covered by Plan -- A
Participant who is transferred from employment with one of the Companies to
employment as an Eligible Employee with another one of the Companies may remain
a Participant of the Plan with his or her new Company.
2.4 Transfer to Position Not Covered by Plan -- If a Participant is
transferred to another position with the Employer in which the Participant is no
longer an Eligible Employee, the Participant will remain a Participant of the
Plan with respect to Elective Deferrals previously made but will no longer be
eligible to have Elective Deferrals made to the Plan on his or her behalf until
he or she again becomes an Eligible Employee. In the event the Participant is
subsequently transferred to a position in which he or she again becomes an
Eligible Employee, the Participant may renew Elective Deferrals by communicating
with Fidelity and providing all of the information requested by Fidelity. The
renewal of Elective Deferrals will be effective as of the first administratively
feasible Pay Period following receipt by Fidelity of the requested information.
ARTICLE III - CONTRIBUTIONS
3.1 Employer Contributions -- The Companies shall contribute to the
Trust established under this Plan from Net Annual Profits or Net Profits an
amount equal to the total amount of Elective Deferrals agreed to be made by the
Companies pursuant to designation by Participants.
3.2 Elective Deferrals -- Elective Deferrals must be made in one
percent (1%) increments with a minimum Elective Deferral of one percent (1%) of
Eligible Compensation and a maximum Elective Deferral of seventeen percent
(17%); provided, however, that effective for any Plan Year beginning on or after
January 1, 1987, in no event may the amount of Elective Deferrals to the Plan,
when taken into account with all other elective deferrals (as defined in Code
Section 402(g)) made by a Participant under any other plan maintained by the
Employer, exceed $7,000 (adjusted for increases in the cost of living under Code
Section 402(g)) in any calendar year. If a Participant participates in another
plan or arrangement which is not maintained by the Employer and which permits
elective deferrals in any calendar year and his total Elective Deferrals under
the Plan and other plan(s) exceed $7,000 (as adjusted) in a calendar year, he
may request to receive a distribution of the amount of the excess deferral (a
deferral in excess of $7,000 (as adjusted)) that is attributable to Elective
Deferrals to this Plan together with earnings thereon, notwithstanding any
limitations on distributions contained in the Plan. Such distribution shall be
made by the April 15 following the Plan Year in which the Elective Deferrals
were made, provided that the Participant notifies the Administrator of the
amount of the excess deferral that is attributable to Elective Deferrals to the
Plan and requests such a distribution. The Participant's notice must be received
by the Administrator no later than the March 1 following the Plan Year of the
excess deferral. In the absence of such notice, the amount of such excess
deferral attributable to Elective Deferrals to this Plan shall be subject to all
limitations on withdrawals and distributions in the Plan. In addition to
distributing excess deferrals at the request of the Participant, the
Administrator shall distribute any deferrals made under this Plan or any other
plan of the Employer in excess of the statutory maximum deferral of $7,000 (as
adjusted). For this purpose as provided in 26 CFR Section 1.402(g)-1(e)(2), a
<PAGE>
5
Participant is deemed to notify the Administrator of any excess deferrals that
arise by taking into account only those Elective Deferrals made to this Plan and
any other plans of this Employer and to request that such excess deferrals be
distributed by the Plan Administrator. The distribution of excess deferrals will
include any earnings or be reduced by any loss allocable to the excess deferrals
pursuant to the Plan method of allocating earnings or losses and calculated to
the last day of the Plan Year in which the excess deferrals were made.
The Administrator may establish prospectively lower limits for Higher
Paid Participants for the purpose of complying with Internal Revenue Code
requirements in an orderly manner.
3.3 Limitations on Elective Deferrals --
(a) In no event may Elective Deferrals made on behalf of all Higher
Paid Eligible Employees with respect to any Plan Year result in an Actual
Deferral Percentage for such group of Higher Paid Eligible Employees which
exceeds the greater of (i) or (ii) where:
(i) is an amount equal to 125 percent of the Actual
Deferral Percentage for all Non-Higher Paid Eligible
Employees who have satisfied the eligibility
requirements of Article II with respect to such Plan
Year; and
(ii) is an amount equal to the Actual Deferral Percentage
for all Non-Higher Paid Eligible Employees who have
satisfied the eligibility requirements of Article II
with respect to such Plan Year and two percent (2%),
provided that such amount does not exceed 200 percent
of such Actual Deferral Percentage.
(b) The Administrator shall be authorized to implement rules
authorizing or requiring reductions in Elective Deferrals that may be made by
Higher Paid Eligible Employees during the Plan Year (prior to any contributions
to the Trust) so that the limitation of Section 3.3(a) is satisfied.
(c) The Company may in its discretion make Qualified Nonelective
Contributions to the Accounts of certain Non-Higher Paid Eligible Employees to
the extent required to satisfy the limitations of Section 3.3(a).
<PAGE>
6
(d) If the limitation under Section 3.3(a) is exceeded in any Plan
Year, the Excess Amounts made on behalf of Higher Paid Eligible Employees with
respect to a Plan Year (and earnings allocable thereto) shall then be
distributed to such Employees as soon as practicable after the end of such Plan
Year, but no later than the last day of the immediately following Plan Year. The
Excess Amounts distributed shall include Elective Deferrals and the income
allocable thereto. The amount of income allocable to Excess Amounts shall be
determined in accordance with the regulations issued under Section 401(k) of the
Code and shall include income for the Plan Year for which the Excess Amounts
were made. Any such distributions shall be reduced by the amount of any
distributions made pursuant to Section 3.2 above.
(e) The Administrator may utilize any combination of the methods
described in Sections 3.3(b), (c) and (d) to assure that the limitations of
Section 3.3(a) are satisfied.
(f) For purposes of this Section 3.3, the following definitions
and special rules shall apply:
(i) The term "Annual Earnings" means the Employee's wages
which are required to be reported on IRS Form W-2 for
the calendar year which coincides with the Plan Year.
(ii) The term "Actual Deferral Percentage" shall mean,
with respect to any group of actively employed
Eligible Employees who have satisfied the eligibility
requirements of Article II for a Plan Year, the
average of the ratios, calculated separately for each
such Eligible Employee in the group, of:
(A) The amount of Elective Deferrals paid to the
Trust Fund for such Plan Year, divided by
(B) The Eligible Employee's Annual Earnings,
including any Elective Deferrals made by the
Companies to the Plan on behalf of the
Eligible Employee and any pre-tax elective
contributions made by the Companies which
are excludible from the Eligible Employee's
income under Section 125 of the Code.
Elective Deferrals shall be taken into account for a Plan Year only if
such amounts are allocated to the Eligible Employee's Account as of a date
within that Plan Year. For this purpose, an Elective Deferral is considered
allocated as of a date within a Plan Year if the allocation is not contingent on
participation or performance of services after such date and the Elective
Deferral is actually paid to the Trust Fund no later than 12 months after the
Plan Year to which the contribution relates.
<PAGE>
7
(iii)The term "Excess Amounts" shall mean with respect to each Higher
Paid Eligible Employee who has satisfied the eligibility requirements of
Article II for a Plan Year, the amount equal to total Elective Deferrals
made on behalf of such Employee (determined prior to the application of the
leveling procedure described below) minus the product of the Employee's
Actual Deferral Percentage (determined after the leveling procedure
described below) multiplied by the amount specified in Section
3.3(f)(ii)(B) above. In accordance with the regulations issued under
Section 401(k) of the Code, Excess Amounts shall be determined by a
leveling procedure under which the Actual Deferral Percentage of the Higher
Paid Eligible Employee with the highest such percentage shall be reduced to
the extent required to enable the limitation of Section 3.3(a) to be
satisfied or, if it results in a lower reduction, to the extent required to
cause such Higher Paid Eligible Employee's Actual Deferral Percentage to
equal the Actual Deferral Percentage of the Higher Paid Eligible Employee
with the next highest Actual Deferral Percentage. This leveling procedure
shall be repeated until the limitation of Section 3.3(a) is satisfied.
(iv) The term "Qualified Nonelective Contributions" means
contributions that are made pursuant to Sections 3.3(c) or 3.8(c), meet the
requirements of Section 401(m)(4)(C) of the Code and the regulations issued
thereunder, and which are designated as a Qualified Nonelective
Contribution for purposes of satisfying the limitations of Sections 3.3(c)
or 3.8(c). Qualified Nonelective Contributions shall be nonforfeitable when
made and are distributable only in accordance with the distribution and
withdrawal provisions that are applicable to Elective Deferrals under the
Plan; provided, however, that Qualified Nonelective Contributions may not
be withdrawn on account of financial hardship. If any Qualified Nonelective
Contributions are made, the Company shall keep such records as necessary to
reflect the amount of such contributions made for purposes of satisfying
the limitations of Sections 3.3(c) or 3.8(c).
(v) In the event the Companies maintain two or more plans that are
treated as a single plan for purposes of Sections 401(a)(4) and 410(b) of
the Code (other than Section 410(b)(2)(A)(ii) of the Code), all elective
deferrals made under the two plans shall be treated as made under a single
plan, and if two or more of such plans are permissively aggregated for
purposes of Section 401(k) of the Code, such plans shall be treated as a
single plan for purposes of satisfying Sections 401(a)(4) and 410(b) of the
Code.
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8
(vi) In determining the Actual Deferral Percentage of a Higher Paid
Eligible Employee, all cash or deferred arrangements in which such Higher
Paid Eligible Employee is eligible to participate shall be treated as a
single arrangement.
(vii)The family aggregation rules of Section 414(q)(6) of the Code
shall apply to any Higher Paid Eligible Employee who is a five percent
owner or one of the ten most highly compensated Higher Paid Eligible
Employees. The Actual Deferral Percentage for the family group, which is
treated as one Higher Paid Eligible Employee, is the Actual Deferral
Percentage determined by combining the contributions and compensation of
all eligible Family Members. Except to the extent taken into account in
this Paragraph (vii), the contributions and compensation of all Family
Members are disregarded in determining the Actual Deferral Percentages for
all Employees.
(g) The limitations of this Section 3.3 shall apply to Plan Years
beginning on or after January 1,
1987.
3.4 Reinstatement of Reduced Amounts -- Any reduction effected pursuant
to Section 3.3 will remain in effect for the remainder of the Plan Year in which
the reduction occurs and will not be automatically reinstated. A Participant
whose Elective Deferral has been reduced may elect to increase his or her
Elective Deferral effective as of any Pay Period subsequent to notice from the
Administrator that Elective Deferrals may be increased as of a specified Pay
Period. This election must be made in accordance with the procedure described in
Section 3.5.
3.5 Change in Elective Deferrals -- Except as provided in Sections 3.3
and 3.4, any Participant may change his or her Elective Deferral percentage to
increase or decrease said percentage by notifying Fidelity, such change to take
effect as of the next administratively feasible Pay Period.
3.6 Voluntary Reduction of Elective Deferral to Zero -- Notwithstanding
the notice requirements specified in Section 3.5, any Participant may elect to
reduce the level of the Participant's Elective Deferral to zero as of the
beginning of any Pay Period. The reduction will take effect as soon as
practicable following telephone notification by the Participant to Fidelity. A
Participant who has reduced his or her Elective Deferral to zero may again make
Elective Deferrals as of the next administratively feasible Pay Period
subsequent to telephone notification to Fidelity.
<PAGE>
9
3.7 Matching Contributions -- For each Plan Year, commencing on or
after January 1, 1994, subject to limitations imposed by the Internal Revenue
Code, the Companies will match from Net Annual Profits or Net Profits the
Elective Deferral of each Participant at the rate of one-half (1/2) of the
Participant's Elective Deferral on an annual basis provided that: (i) for any
Pay Period the matching amount shall not exceed three percent (3%) of the
Participant's Eligible Compensation for that pay period; and (ii) as soon as
administratively feasible subsequent to the end of the Plan Year, the
differential, if any, by which an amount equal to one-half (1/2) of the
Participant's Elective Deferral for the Plan Year exceeds the amount of Matching
Contributions actually made to Participant for that year, to an annual maximum
of three percent (3%) of the Participant's Eligible Compensation for the Plan
Year. will be paid into the Participant's Account.
3.8 Limitations on Matching Contributions.
(a) In no event may the Matching Contributions made on behalf of all
Higher Paid Eligible Employees, or forfeitures allocated to the Accounts of such
Employees, who have satisfied the eligibility requirements of Article II with
respect to any Plan Year result in an Actual Contribution Percentage for such
group of Higher Paid Eligible Employees which exceeds the greater of (i) or (ii)
where:
(i) is an amount equal to 125 percent of the Actual Contribution
Percentage for all Non-Higher Paid Eligible Employees who have
satisfied the eligibility requirements of Article II with
respect to such Plan Year; and
(ii) is an amount equal to the Actual Contribution Percentage for
all Non-Higher Paid Eligible Employees who have satisfied the
eligibility requirements of Article II with respect to such
Plan Year and two percent (2%), provided that such amount does
not exceed 200 percent of such Actual Contribution Percentage.
(b) The Administrator shall be authorized to implement rules
authorizing or requiring reductions in Matching Contributions that may be made
by Higher Paid Eligible Employees during the Plan Year (prior to any
contributions to the Trust Fund), so that the limitation of Section 3.8(a) is
satisfied.
(c) The Company may in its discretion make Qualified Nonelective
Contributions to the accounts of certain Non-Higher Paid Eligible Employees to
the extent required to satisfy the limitations of Section 3.8(a).
(d) If the limitation under Section 3.8(a) is exceeded in any Plan
Year, the Excess Amounts made on behalf of Higher Paid Eligible Employees with
respect to a Plan Year (and earnings allocable thereto) shall then be
distributed to such Higher Paid Eligible Employees as soon as practicable after
the end of such Plan Year (or, if forfeitable under the terms of the Plan,
forfeited), but no later than the last day of the immediately following Plan
Year. The Excess Amounts distributed shall include both the Matching
Contributions and the income allocable thereto. The amount of income allocable
to Excess Amounts shall be determined in accordance with the regulations issued
under Section 401(m) of the Code and shall include income for the Plan Year to
which the Excess Amounts relate.
<PAGE>
10
(e) Elective Deferrals and Matching Contributions shall be further
limited to the extent required to prevent prohibited multiple use of the
alternative limitation described in Sections 401(k)(3)(A)(ii)(II) and
401(m)(2)(A)(ii) of the Code and the provisions of Reg. Section 1.401(m)-2(b)
and any further guidance issued thereunder. If such multiple use occurs, the
Actual Contribution Percentage for all Higher Paid Eligible Employees
(determined after applying the foregoing provisions of this Section 3.8) shall
be reduced in accordance with Reg. Section 1.401(m)-2(c) and any further
guidance issued thereunder in order to prevent such multiple use of the
alternative limitation.
(f) The Administrator may utilize any combination of the methods
described in Sections 3.8(b), (c) and (d) to assure that the limitations of
Sections 3.8(a) and (e) are satisfied.
(g) For purposes of this Section 3.8, the following definitions and
special rules shall apply:
(i) The term "Annual Earnings" shall have the meaning specified in
Section 3.3(f)(i).
(ii) The term "Actual Contribution Percentage" shall mean, with
respect to any group of actively employed Eligible Employees
who have satisfied the eligibility requirements of Article II
for a Plan Year, the average of the ratios, calculated
separately for each such Eligible Employee in the group, of:
(A) The amount of Matching Contributions paid to the
Trust Fund for such Plan Year on behalf of the
Eligible Employee plus the amount of forfeitures
allocated to the Eligible Employee's Account, divided
by
(B) The Eligible Employee's Annual Earnings, including
any Elective Deferrals made by the Companies to the
Plan on behalf of the Eligible Employee or any
pre-tax election contributions under a "cafeteria
plan" (as defined in Section 125 of the Code and
applicable regulations) maintained by the Companies
for such Plan Year.
Matching Contributions and forfeitures shall be taken into account for
a Plan Year only if such amounts are allocated to the Eligible Employee's
Account as of a date within that Plan Year, such amounts are actually paid to
the Trust no later than 12 months after the Plan Year to which the contribution
relates and such amounts are contributed on account of Elective Deferrals for
such Plan Year.
<PAGE>
11
(iii) The term "Excess Amounts" shall mean with respect to each Higher
Paid Eligible Employee, the amount equal to the total Matching
Contributions made on behalf of the Eligible Employee together with the
forfeitures allocated to the Eligible Employee's Account (determined prior
to the application of the leveling procedure described below) minus the
product of the Eligible Employee's Actual Contribution Percentage
(determined after the leveling procedure described below) multiplied by the
amount specified in Section 3.8(g)(ii)(B) above. In accordance with the
regulations issued under Section 401(m) of the Code, Excess Amounts shall
be determined by a leveling procedure under which the Actual Contribution
Percentage of the Higher Paid Eligible Employee with the highest such
percentage shall be reduced to the extent required to enable the limitation
of Section 3.8(a) to be satisfied or, if it results in a lower reduction,
to the extent required to cause such Higher Paid Eligible Employee's Actual
Contribution Percentage to equal the Actual Contribution Percentage of the
Higher Paid Eligible Employee with the next highest Actual Contribution
Percentage. This leveling procedure shall be repeated until the limitation
of Section 3.8(a) is satisfied.
(iv) The term "Qualified Nonelective Contributions" shall have the
meaning specified in Section 3.3(f)(iv).
(v) In the event the Companies maintain two or more plans that are
treated as a single plan for purposes of Sections 401(a)(4) and 410(b) of
the Code (other than Section 410(b)(2)(A)(ii) of the Code), all Matching
Contributions and forfeitures under the two plans shall be treated as made
under a single plan, and if two or more of such plans are permissibly
aggregated for purposes of Section 401(m) of the Code, such plans shall be
treated as a single plan for purposes of satisfying Sections 401(a)(4) and
410(b) of the Code.
(vi) In determining the Actual Contribution Percentage of a Higher
Paid Eligible Employee, all plans in which such Higher Paid Eligible
Employee is eligible to participate shall be treated as a single
arrangement.
(vii) The family aggregation rules of Section 414(q)(6) of the Code
shall apply to any Higher Paid Eligible Employee who is a five percent
owner or one of the ten most highly compensated Higher Paid Eligible
Employees. The Actual Contribution Percentage for the family group, which
is treated as one Higher Paid Eligible Employee, is the Actual Contribution
Percentage determined by combining the contributions and compensation of
all eligible Family Members. Except to the extent taken into account in
this Paragraph (vii), the contributions and compensation of all Family
Members are disregarded in determining the Actual Contribution Percentages
for all Employees.
<PAGE>
12
(h) The limitations of this Section 3.8 shall apply to Plan Years
beginning on or after January 1, 1987.
(i) Notwithstanding anything in the Plan to the contrary, if the rate
of Matching Contributions, determined after application of the corrective
mechanisms described in Section 3.3, discriminates in favor of Higher Paid
Eligible Employees, any such amounts attributable to any Excess Amounts (as
described in Subsection 3.3(f)(iii)) of each affected Higher Paid Eligible
Employee shall be forfeited so that the rate of Matching Contribution is
nondiscriminatory. Any such forfeitures shall be made no later than the end
of the Plan Year following the Plan Year for which the Matching
Contribution was made and shall be treated in accordance with Section 3.9.
3.9 Forfeitures --
(a) In the event that a Participant incurs a Severance from Service
prior to attaining a Nonforfeitable right to the Participant's Matching
Contribution, the Matching Contribution Account will be forfeited as of the
first day of the month immediately following the earliest of: (i) the date on
which the Participant incurs a Period of Severance of five consecutive years;
(ii) death; or (iii) the date on which the Participant's Employee Account is
distributed in accordance with Article VI. Forfeitures of Matching Contributions
will be used to reduce future contributions of the Companies to the Plan.
(b) If, in connection with his Severance from Service, a Participant
received a distribution of his Employee Account when he did not have a
Nonforfeitable right to his Matching Contribution Account, the Matching
Contributions that were forfeited, unadjusted by any subsequent gains or losses,
shall be restored if he again becomes an Employee prior to incurring a Period of
Severance of five consecutive years, performs an Hour of Service, and repays the
full value of his prior distributions, unadjusted for subsequent gains and
losses, before the first to occur of (i) the end of the five year period
beginning with the date he again becomes an Employee or (ii) the date on which
he incurs a Period of Severance of five consecutive years.
<PAGE>
13
3.10 Rollover Contributions and Transfers --
(a) Effective April 1, 1991, Participants may transfer into the Plan
qualifying rollover amounts (as defined in Section 402 of the Code) received
from other qualified plans subject to Section 401(k) or Section 401(m) of the
Code; qualified defined contribution pension or profit sharing plans, provided
that no federal income tax has been required to have been paid previously on
such amounts; or rollover contributions from an individual retirement account
described in Section 408(d)(3)(A)(ii) of the Code (referred to herein as a
"conduit IRA"). Such transfers will be referred to as "rollover contributions"
and will be subject to the following conditions:
(i) the transferred funds are received by the Trustee no later
than sixty (60) days from receipt by the Employee of a
distribution from another qualified Section 401(k) or Section
401(m) plan or, in the event that the funds are transferred
from a conduit IRA, no later than sixty (60) days from the
date that the Participant receives such funds from the
individual retirement account, subject, however, to (v) below
where applicable;
(ii) the amount of such rollover contributions shall not exceed the
limitations set forth in Section 402 of the Code;
(iii) rollover contributions shall be taken into account by the
Administrator in determining the Participant's eligibility for
a loan pursuant to Article VII;
(iv) rollover contributions may be distributed at the request of
the Participant, subject to the same administrative procedures
as apply to other distributions;
(v) rollover contributions may not be received by the Trustee
earlier than the Pay Period upon which the Participant elects
to join the Plan;
(vi) rollover contributions transferred pursuant to this paragraph
(a) of Section 3.10 shall be credited to the Participant's
Rollover Contribution Account. Rollover contributions will be
invested upon receipt by the Trustee;
(vii) no rollover contribution will be accepted unless (A) the
Employee on whose behalf the rollover contribution will be
made is either a Participant or has notified the Administrator
that he intends to become a Participant on the first date on
which he is eligible therefor; and (B) all required
information, including selection of specific investment
accounts, is provided to Fidelity. When the rollover
contribution has been deposited, any further change in
investment allocation of future deferrals or transfer of
account balances between investment funds will be effected
through the procedures set forth in Sections 4.2 and 4.3.
(viii) Under no circumstances shall the Administrator accept as a
rollover contribution amounts which have previously been
subject to federal income tax.
<PAGE>
14
(b) Effective January 1, 1993, Participants may direct that "eligible
rollover distributions," as defined in Section 402(c) of the Code, be
transferred directly to the Plan. Rules similar to those applicable to "rollover
contributions" shall apply to amounts transferred directly to the Plan.
(c) Participants who are also covered under the Raytheon Stock
Ownership Plan and who are entitled to diversify their accounts under such plan,
may direct that the portion of their account which is eligible for
diversification under such plan be transferred to the Plan. Rules similar to
those applicable to "rollover contributions" shall apply to amounts transferred
to this Plan except that such transferred amounts shall not be eligible for
loans or withdrawals.
(d) Account balances held in other defined contribution plans sponsored
by member of the Raytheon controlled group of corporations by Participants in
this Plan shall be transferred to this Plan on the following conditions:
(i) the account balances, including loan balances, held by former
Employees of Serv-Air in the Serv-Air Inc. Savings and Retirement Plan
(E-Systems Bright Plan) will be transferred to this Plan on March 1, 1996,
or as soon thereafter as is administratively feasible, provided that the
accounts of those Participants who notify the local employee benefits
office of their desire not to have their accounts transferred will not be
transferred as of March 1, 1996, but may be transferred in the future as of
specified dates by mutual consent of the respective Plan sponsors and
record keepers. The account balances transferred from the Serv-Air Inc.
Savings and Retirement Plan may, at the election of the member, be
distributed in either a lump sum payable in cash or substantially level
periodic installments, or a combination thereof. In the event distribution
is delayed or in the event distribution is in installments, the allocation
of gains and losses shall continue to be applicable to the transferred
balance until fully distributed;
(ii) the account balances of Employees of Seiscor Technologies Inc.
which are being held in the Seiscor Technologies 401(k) Plan (including
loan balances, after-tax contributions and earnings thereon) shall be
transferred to this Plan on March 1, 1996, or as soon thereafter as
administratively feasible;
<PAGE>
15
(iii) Participants who were participants in the United Dominion
Industries Compass Plan may transfer pre-tax and after-tax accounts to this
Plan on or after January 1, 1996. Such Participants who were hired by
United Dominion Industries prior to July 1, 1990, may elect, upon
retirement, to use all or part of the Rollover Account (including the
after-tax subaccount) received from the United Dominion Industries Compass
Plan and the earnings thereon to purchase an annuity providing a lifetime
monthly benefit. A list of the Participants who have a right to elect a
lifetime annuity with respect to their rollover account received from the
United Dominion Industries Compass Plan is set forth on Appendix D hereof.
If the Participant is married, the annuity will be paid in the standard
form of a 50% joint and survivor annuity with the spouse as the joint
annuitant unless the spouse consents in writing before a notary public to a
different form of annuity.
(e) Separate subaccounts shall be established for all amounts received
from after-tax accounts in the Seiscor Technologies 401(k) Plan and the United
Dominion Industries Compass Plan, and such other plans from which transfers of
after-tax accounts to this Plan have been approved by the Administrator.
Fidelity shall maintain appropriate records for these after-tax subaccounts for
tax purposes, including determining the appropriate basis upon which earnings
will be taxed at the time of withdrawal or distribution. Participants may not
borrow against the balances in these after-tax subaccounts. Withdrawals may be
made from such accounts pursuant to Section 6.3.
3.11 Refund of Contributions to the Companies -- Notwithstanding the
provisions of Article XII, if, or to the extent that, the Companies' deductions
for contributions made to the Plan are disallowed, the Companies will have the
right to obtain the return of any such contributions for a period of one year
from the date of disallowance. For this purpose, all Elective Deferrals and
Matching Contributions are made subject to the conditions that they are
deductible under the Code for the taxable year of the Companies for which the
contribution is made. Furthermore, any contribution made by the Companies on the
basis of a mistake in fact may be returned to the Companies within one year from
the date such contribution was made.
ARTICLE VI - INVESTMENT OF ACCOUNTS
4.1 Election of Investment Funds -- Upon enrollment in the Plan, each
Participant shall direct that the funds in the Participant's Employee Account
and Matching Contribution Account be invested in increments of one percent (1%)
in one or more of the following investment funds:
<PAGE>
16
Fund A - an equity fund designated by the Administrator;
Fund B - a fixed income fund designated by the Administrator;
Fund C - Raytheon Company common stock fund;
Fund D - a stock index fund designated by the Administrator;
Fund E - a balanced fund designated by the Administrator;
Fund F - a growth fund, designated by the Administrator, investing
primarily in equities of companies of all types and sizes;
Fund G - a growth fund, designated by the Administrator, investing
primarily in equities of well-known and established companies.
In its discretion, the Administrator may from time to time designate
new funds and, where appropriate, preclude investment in existing funds and
provide for the transfer of Accounts invested in those funds to other funds
selected by the Participant or, if no such election is made, to Fund B or
similar low risk fixed income fund as determined by the Administrator in its
discretion.
Each election will apply to both accounts so that the Employee Account and
Matching Contribution Account of the Participant will be invested in the same
percentages in the one or more investment funds selected by the Participant.
Officers covered the Securities and Exchange Commission Regulation 16b wil not
be eligible to elect Fund C, the Raytheon common stock fund, until such election
is approved by the shareholders of Raytheon Company. Any request to invest in or
transfer out of the Raytheon Common Stock Fund by an "executive officer," as
that term is defined in the regulations of the Securities Exchange Commission
(SEC) shall not become effective until six (6) months subsequent to the date the
Administrator is notified of the request.
4.2 Change in Investment Allocation of Future Deferrals -- Each
Participant may elect to change the investment allocation of future Elective
Deferrals, Matching Contributions and rollover contributions effective as of the
first administratively feasible Business Day subsequent to telephone notice to
Fidelity. Any changes must be made either in increments of one percent (1%) of
the Participant's Account or in a specified whole dollar amount and must result
in a total investment of one hundred percent (100%) of the Participant's
Account.
<PAGE>
17
4.3 Transfer of Account Balances Between Investment Funds -- Each
Participant may elect to transfer all or a portion of the amount in the
Participant's Employee Account, Matching Contribution Account and Rollover
Contribution Account between investment funds effective as of the first
administratively feasible Business Day following telephone notice to Fidelity.
In determining the amount of the transfer, the Participant's Account shall be
valued as of the close of business on the Business Day on which telephone notice
is received; provided, however, that in any case where the telephone notice is
received after 4:00 p.m. Eastern Time (daylight or standard, whichever is in
effect on the date of the call), the Account shall be valued as of the close of
business on the next Business Day. Such transfers must be made in either one
percent (1%) increments of the entire Account or in a specified amount in whole
dollars and, as of the completion of the transfer, must result in investment of
one hundred percent (100%) of the Account. Transfers shall be effected by
telephone notice to Fidelity.
4.4 Ownership Status of Funds -- The Trustee shall be the owner of
record of the assets in the funds specified as Funds A, B, C, D and E and such
other funds as may be established by the Administrator. The Administrator shall
have records maintained as of the Valuation Date for each fund allocating a
portion of the fund to each Participant who has elected that his or her Account
be invested in such fund. The records shall reflect each Participant's portion
of Funds A, B, D and E, and such other funds as may be established by the
Administrator, in a cash amount and shall reflect each Participant's portion of
Fund C in cash and unitized shares of stock.
4.5 Voting Rights -- Participants whose Account has shares of
participation in the Raytheon Company Common Stock Fund on the last business day
of the second month preceding the record date (the "Voting Eligibility Date")
for any meeting of stockholders have the right to instruct the Trustee as to
voting at such meeting. The number of votes is determined by dividing the value
of the shares in the Participant's Account in the Raytheon Common Stock Fund by
the closing price of Raytheon Common Stock on the Voting Eligibility Date. If
the Trustee has not received instructions from a Participant as to voting of
shares within a specified time, then the Trustee shall not vote those shares. If
a Participant furnishes the Trustee with a signed vote direction card without
indicating a voting choice thereon, the Trustee shall vote Participant's shares
as recommended by management. In addition, each Participant shall have the right
to accept or reject any tender or exchange offer for shares of common stock. The
Trustee shall vote (or tender or exchange) all combined fractional shares of
Raytheon Common Stock to the extent possible in the same proportion as the
shares which have been voted (or tendered or exchanged) by each Participant. Any
instructions as to voting (or tender or exchange) received from an individual
Participant shall be held in confidence by the Trustee and shall not be divulged
to the Companies or to any officer or employee thereof or to any other person.
<PAGE>
18
ARTICLE V - VESTING
5.1 Employee and Rollover Contribution Accounts -- Each Participant
shall have a Nonforfeitable right to any amounts in the Participant's Employee
and Rollover Contribution Accounts.
5.2 Matching Contribution Account -- Each Participant shall have a
Nonforfeitable right to the Participant's Matching Contribution Account upon the
earliest of:
(a) Completion of a Period of Service of five (5) years commencing on
or after January 1, 1984 (for purposes of determining the length of a Period of
Service under this paragraph only, vesting service credited to an Employee under
Section 6.2(b) of the Speed Queen Company Retirement Savings Plan will be
credited to an Eligible Employee regardless of whether such vesting service was
earned prior to January 1, 1984; service with Unimac Company, Inc. by an
Employee who became an Employee of Speed Queen Company by reason of the purchase
by Speed Queen of the assets of Unimac Company, Inc. will be credited to an
Eligible Employee as vesting service under this Plan and service with Litwin
Engineers & Constructors, Inc. by an Employee who became an Employee of Raytheon
Engineers & Constructors, Inc. by reason of the purchase by Raytheon Engineers &
Constructors, Inc. of the assets of Litwin Engineers & Constructors, Inc. will
be credited to an Eligible Employee as vesting service under this Plan); service
with E-Systems or one of its subsidiaries will be credited as vesting service
under this Plan; or
(b) Completion of a Period of Participation of three (3) years
subsequent to fulfillment of the eligibility requirements in Sections 2.1 or 2.2
(except that, in applying this paragraph to Employees on the payroll of Arkansas
Aerospace Inc. as of June 30, 1994, who, as of July 1, 1994, become Participants
in this Plan, the Employment Commencement Date (or, if a Period of Severance
occurred since such date, the Reemployment Commencement Date) with Arkansas
Aerospace Inc. shall be deemed to be the date of commencement of participation
under this Plan and, in applying this paragraph to Employees on the payroll of
Speed Queen Company as of December 31, 1994, who, as of January 1, 1995, become
Participants in this Plan, the most recent date on which the Employee commenced
participation in the Unimac Company, Inc. Retirement Plan shall be deemed to be
the date of commencement of participation under this Plan); and, in applying
this paragraph to Employees on the salaried payrolls of Standard Havens, Inc. as
of March 31, 1995, who as of April 1, 1995, become Participants in this Plan,
the most recent date on which the Employee commenced participation in the
Standard Havens, Inc. 401(k) Profit Sharing Plan shall be deemed the date of
commencement of participation under this Plan; or
(c) The Participant's Retirement, death (while an Employee),
Disability or attainment of Normal Retirement Age; or
(d) The date of layoff of Participants laid off as a result of the
permanent closing of the Oxnard plant; or
(e) November 20, 1992, for those Participants who were employed by
Seismograph Service Corporation or GeoQuest Systems, Inc. as of such date and
became employees of Schlumberger, Inc. or a subsidiary thereof as a
result of the sale of the Raytheon seismic business to Schlumberger; or
<PAGE>
19
(f) The date of Layoff of Participants laid off as a result of the
sale of the Sorensen facility; or
(g) The date of transfer for those Participants permanently transferred
to Standard Missile Company (a joint venture between Raytheon Company and Hughes
Missile Systems Company).
(h) October 31, 1995, for those Participants who were employed by
D. C. Heath as of such date and became employees of Houghton Mifflin Inc., or a
subsidiary thereof, as a result of the sale of the D. C. Heath business to
Houghton Mifflin on October 31, 1995.
5.3 Break in Service Rules
(a) Periods of Service -- In determining the length of a Period of
Service, the Administrator shall include all Periods of Service, except the
following Periods of Service shall not be taken into account:
(i) in the case of a Participant who has made no Elective
Deferrals to the Plan, the Period of Service before any Period
of Severance which equals or exceeds five consecutive years;
and
(ii) in the case of a Participant who has made Elective Deferrals
to the Plan and who has incurred a Period of Severance which
equals or exceeds five years, the Period of Service after such
Period of Severance shall not be taken into account for
purposes of determining the nonforfeitable interest of such
Participant in the Matching Contributions allocated to his
Account prior to such Period of Severance.
(b) Periods of Severance -- In determining the length of a Period of
Service for purposes of Section 14.37, the Administrator shall include any
period of time beginning on an Employee's Severance from Service Date and ending
on the date on which he is next credited with an Hour of Service, provided that
such Hour of Service is credited within the 12 consecutive month period
following such Severance from Service Date.
(c) Other Periods -- In making the determinations described in
subsections (a) and (b) of this Section 5.3, the second, third, and fourth
consecutive years of a Layoff (from the first anniversary of the last day paid
to the fourth anniversary of the last day paid) and any period in excess of one
(1) year of an Authorized Leave of Absence shall be regarded as neither a Period
of Service nor a Period of Severance.
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20
ARTICLE VI - WITHDRAWALS
6.1 In-Service Withdrawals - Matching Contributions -- Upon completion
of a Period of Participation of five (5) years, a Participant may withdraw,
subject to both a minimum withdrawal amount of $250 and the requirement that a
Participant may withdraw no more than twice during a Plan Year, if no loans are
outstanding, and only once during a Plan Year if loans are outstanding, all or
part of the Participant's Matching Contribution Account. Withdrawals will be
based upon the value of the Account as determined under Section 6.8. Withdrawals
from Funds A, B, D and E, and such other funds as may be established by the
Administrator will be made in cash; withdrawals from Fund C will be made in cash
or stock (with cash for fractional or uninvested shares) as directed by the
Participant. Funds for the withdrawal will be taken on a pro rata basis against
the Participant's investment fund balances in the Participant's Matching
Contribution Account.
6.2 In-Service Withdrawal - Employee Account -- While in a Period of
Service, a Participant may withdraw assets from his or her Account as follows:
(a) all or a portion of the Participant's Employee Account upon
attainment of age 59 1/2 or
(b) a distributable amount (as defined in Treas. Reg. Section
1.401(k)-1(d)(2)) on account of a hardship as defined in the regulation. A
distribution is made on account of a hardship only if the distribution both is
made on account of an immediate and heavy financial need of the Participant and
is necessary to satisfy the financial need. In determining the amount required
to satisfy the financial need, the Administrator shall take into account the
federal, state and local income taxes or penalties reasonably anticipated to
result from the withdrawal. The distributable amount is equal to the
Participant's total Elective Deferrals as of the date of distribution reduced by
the amount of previous distributions on account of hardship and increased by
that portion of income allocable to Elective Deferrals which was credited to the
Participant's Account as of December 31, 1988. Withdrawals from the Employee
Accounts of less than $250 will not be permitted. Withdrawals will be based upon
the value of the Account as determined under Section 6.8. Payment of the amount
withdrawn will be made as soon as reasonably practicable after the effective
date of the withdrawal. Withdrawals from Funds A, B, D and E, and such other
funds as may be established by the Administrator, will be made in cash;
withdrawals from Fund C will be made in cash or stock (with cash for fractional
or unissued shares) as elected by the Participant. Funds for the withdrawal will
be taken on a pro rata basis against the Participant's investment fund balances
in the Participant's Employee Account.
6.3 In-Service Withdrawal - Rollover Contribution Account -- A
Participant may withdraw all or a portion of the Participant's Rollover
Contribution Account. Withdrawals will be based upon the value of the Account as
determined under Section 6.8. Payment of the amount withdrawn will be made as
soon as reasonably practicable after the effective date of the withdrawal.
Withdrawals from Funds A, B and D will be made in cash. Withdrawals from Fund C
will be made in cash or stock (with cash for fractional or unissued shares) as
elected by the Participant.
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21
6.4 Requirements For Financial Hardship Withdrawals --
(a) A Participant requesting a withdrawal of the distributable amount
of the Participant's Employee Account due to reasons of immediate and heavy
financial need must submit such documentation or information in other form as
required by the Administrator and shall advise Fidelity by telephone notice or
such other means as established by the Administrator's rules then in effect of
the existence of an immediate and heavy financial need and the fact that the
need will be satisfied by the requested distribution.
(b) The Participant shall represent that this financial need cannot be
satisfied by any of the following sources: through reimbursement or compensation
by insurance or otherwise; by liquidation of the Participant's assets; by
cessation of Elective Deferrals under the Plan; or by other distributions or
non-taxable (at the time of the loan) loans currently available from plans
maintained by the Employer or by any other employer, or by borrowing from
commercial sources on reasonable commercial terms.
(c) For purposes of Section 6.2, "immediate and heavy financial need"
is limited to financial need arising from the following specific causes:
expenses for medical care (as described in Section 213(d) of the Code)
previously incurred by the Participant, the Participant's spouse or any
dependents (as defined in Section 152 of the Code) of the Participant, or which
are necessary for these persons to obtain medical care described in Section
213(d) of the Code; costs directly related to the purchase of a principal
residence for the Participant (excluding mortgage payments); payment of tuition
and related educational expenses for the next twelve months of post-secondary
education for the Participant, or the Participant's spouse, children or
dependents (as defined in Section 152 of the Code); expenses relating to the
need to prevent the eviction from or foreclosure on the Participant's principal
residence; or any other circumstance, as determined by the Administrator based
upon all the relevant facts, establishing substantial justification for the
withdrawal.
(d) If a Participant receives a withdrawal for reasons of financial
hardship, his or her Elective Deferrals shall be reduced to six percent (6%), if
in excess thereof as of the date of distribution, and shall not be increased
during the twelve months immediately subsequent to the date of distribution.
6.5 Redeposits Prohibited -- No amount withdrawn pursuant to Section
6.1, Section 6.2 or Section 6.3 may be redeposited in the Plan.
6.6 Distribution -- Distribution of the Participant's Employee Account
and Rollover Contribution Account and, if the Participant has a Nonforfeitable
right to his or her Matching Contribution Account pursuant to Section 5.2, the
Matching Contribution Account, will be made at the direction of the Participant
(or his legal representative or Beneficiary in the case of his Disability or
death) upon the Retirement, Disability (as defined in Section 14.12), death, or
Severance from Service (as defined in Section 14.46) of the Participant. In the
event the Participant dies or his Severance from Service occurs after his Normal
Retirement Age, or if the value of the Nonforfeitable portion of the
Participant's Account as of the Valuation Date which coincides with or
immediately precedes the date of distribution is not in excess of $3,500, the
Administrator shall cause the distribution to automatically be made. Payment
will be made in the form of a lump sum distribution of the entire amount in the
Participant's Account (to which the Participant has a Nonforfeitable right)
which will be paid as soon as practicable following notification to the Benefits
and Services Department, Raytheon Company, Lexington, Massachusetts, of the
Retirement, death, Disability or Severance from Service and a telephone request
by the Participant to Fidelity for the distribution. Distributions will be based
upon the value of the Account as determined under Section 6.8. Distribution of
the amounts in said accounts in the funds designated in Funds A, B, D and E, and
such other funds as may be established by the Administrator, will be made in
cash. Distribution of any amount in said accounts in Fund C (Raytheon Company
stock) will be made in either cash or, if elected by the Participant or, in the
case of death, the Participant's Beneficiary, stock. Partial deferrals will not
be permitted. If there is no Beneficiary surviving a deceased Participant at the
time payment of a Participant's Account is to be made, such payment shall be
made in a lump sum to the person or persons in the first following class of
successive Beneficiaries surviving, any testamentary devise or bequest to the
contrary notwithstanding: the Participant's (a) spouse, (b) children and issue
of deceased children by right of representation, (c) parents, (d) brothers and
sisters and issue of deceased brothers and sisters by right of representation,
or (e) executors or administrators. If no Beneficiary can be located during a
period of seven (7) years from the date of death, the amount of the distribution
shall revert to the Trust and be treated in the same manner as a forfeiture
under Section 3.8.
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22
Except as provided by Section 401(a)(9) of the Code as set forth in
this Section, benefits in the Plan will be distributed to each Participant not
later than the sixtieth (60th) day after the close of the Plan Year in which the
latest of the following events occurs:
(1) attainment by the Participant of Normal Retirement Age;
(2) the tenth (10th) anniversary of the date on which Participant
commenced participation in the Plan; or
(3) Participant's Severance from Service.
If the amount of the benefit payable to a Participant has not been ascertained
by the sixtieth (60th) day after the close of the Plan Year in which the latest
of the three events described in clauses (1), (2) and (3) above occurred, or
Participant cannot be located after reasonable efforts to do so, then payment
retroactive to said sixtieth (60th) day after the close of the Plan Year in
which the latest of the three events occurred may be made no later than sixty
(60) days after the later of the earliest date on which the amount of such
payment can be ascertained under the Plan or the earliest date on which the
Participant is located.
A lump sum distribution of a Participant's Account will be made not
later than April 1 of the calendar year following the calendar year in which the
Participant attains age 70 1/2 or, for Participants who have attained age 70 1/2
before January 1, 1988, and have elected to defer distribution in accordance
with procedures established by the Administrator, the calendar year in which the
Participant retires.
In the event amounts are transferred to this Plan from another plan
qualified under Section 401(a) of the Code (other than amounts described in
Section 3.10(c)), any distribution or withdrawal rights available to the
Participant under such other plan which are protected under Section 411(d)(6) of
the Code shall be available to the Participant under this Plan.
6.7 Withdrawal/Distribution - Executive Officers -- No withdrawal by or
distribution to an "executive officer," as that term is defined by the SEC, from
an Account in the Raytheon Common Stock Fund will be effective until the
expiration of six (6) months from the date the Administrator receives the
request for the withdrawal or distribution.
6.8 Direct Rollovers -- Effective January 1, 1993, a distributee may
elect, at the time and in the manner prescribed by the Administrator, to have
any portion of an eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct rollover. For purposes
of this paragraph, the following terms shall have the following meanings:
<PAGE>
23
(a) Eligible rollover distribution: An eligible rollover distribution
is any distribution of all or any portion of the balance to the credit of the
distributee, except that an eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal periodic payments
(not less frequently than annually) made for the life (or life expectancy) of
the distributee or the joint lives (or joint life expectancies) of the
distributee and the distributee's beneficiary, or for a specified period of 10
years or more; any distribution to the extent such distribution is required
under Section 401(a)(9) of the Code; and the portion of any distribution that is
not includible in gross income.
(b) Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in Section 408(a) of the Code, an
individual retirement annuity described in Section 408(b) of the Code, an
annuity plan described in Section 403(a) of the Code or a qualified trust
described in Section 401(a) of the Code that accepts the distributee's eligible
rollover distribution. However, in the case of an eligible rollover distribution
to the surviving spouse, the term is limited to an individual retirement account
or individual retirement annuity.
(c) Distributee: A distributee includes a Participant or former
Participant. In addition, the Participant's or former Participant's surviving
spouse and the Participant's spouse or former spouse who is the alternate payee
under a qualified domestic relations order, as defined in Section 414(p) of the
Code, are distributees with regard to the interest of the spouse or former
spouse.
(d) Direct Rollover: A direct rollover is a payment by the Plan
to the eligible retirement plan specified by the distributee.
6.9 Determination of Amount of Withdrawal or Distribution -- In
determining the amount of any withdrawal or distribution hereunder, the
Participant's Account shall be valued as of the close of business on the
Business Day on which telephone notice is received; provided, however, that in
any case where the telephone notice is received after 4:00 p.m. Eastern Time
(daylight or standard, whichever is in effect on the date of the call), the
Account shall be valued as of the close of business on the next Business Day.
ARTICLE VII - LOANS
7.1 Availability of Loans -- Participants may borrow against all or a
portion of the balance in the Participant's Employee Account and Rollover
Contribution Account, and the Matching Contribution Account if the Participant
has a Nonforfeitable right thereto pursuant to Section 5.2, subject to the
limitations set forth in this Article. Participants who have incurred a
Severance from Service will not be eligible for a Plan loan. The Vice President,
Human Resources, is authorized to administer this loan program.
7.2 Minimum Amount of Loan -- No loan of less than $500 will be
permitted.
<PAGE>
24
7.3 Maximum Amount of Loan -- No loan in excess of fifty percent (50%)
of the aggregate value of a Participant's Employee Account and Rollover
Contribution Account and the Nonforfeitable portion of Participant's Matching
Contribution Account balances will be permitted. In addition, limits imposed by
the Internal Revenue Code and any other requirements of applicable statute or
regulation will be applied. Under the current requirements of the Internal
Revenue Code, if the aggregate value of a Participant's Employee Account,
Rollover Contribution Account and Nonforfeitable portion of the Matching
Contribution Account exceeds $20,000, the loan cannot exceed the lesser of
one-half (1/2) the Nonforfeitable aggregate value or $50,000 reduced by the
excess of (a) the highest outstanding balance of loans from the Plan during the
one-year period ending on the day before the date on which such loan was made
over (b) the outstanding balance of loans from the Plan on the date on which
such loan was made.
7.4 Effective Date of Loans -- Loans will be effective as
specified in the Administrator's rules then in effect.
7.5 Repayment Schedule - The Participant may select a repayment
schedule of 1, 2, 3, 4 or 5 years. If the loan is used to acquire any dwelling
which, within a reasonable time is to be used (determined at the time the loan
is made) as the principal residence of the Participant, the repayment period may
be extended up to 15 years at the election of the Participant. All repayments
will be made through payroll deductions in accordance with the loan agreement
executed at the time the loan is made, except that, in the event of the sale of
all or a portion of the business of the Employer or one of the Companies, or
other unusual circumstances, the Administrator, through uniform and equitable
rules, may establish other means of repayment. The loan agreement will permit
repayment of the entire outstanding balance in one lump sum. The minimum
repayment amount per pay period is $10 for Participants paid weekly and $50 for
Participants paid monthly. The repayment schedule shall provide for
substantially level amortization of the loan.
7.6 Limit on Number of Loans -- No more than two loans may be
outstanding at any time.
7.7 Interest Rate -- The interest rate for a loan pursuant to this
Article will be equal to the prime rate published in The Wall Street Journal on
the first business day in June and December of each year. The rate published on
the first business day in June will apply to loans which are effective at any
time during the period July 1 through December 31 thereafter; the rate published
on the first business day of December will apply to loans which are effective at
any time during the period January 1 through June 30 thereafter.
<PAGE>
25
7.8 Effect Upon Participants Employee Account -- Upon the granting of a
loan to a Participant by the Administrator, the allocations in the Participant's
Account to the respective investment funds will be reduced on a pro rata basis
and replaced by the loan balance which will be designated as an asset in the
Account. Such reduction shall be effected by reducing the Participant's Accounts
in the following sequence, with no reduction of the succeeding Accounts until
prior Accounts have been exhausted by the loan: Matching Contribution Account;
Employee Account; and Rollover Contribution Account. Upon repayment of the
principal and interest, the loan balance will be reduced, the Participant
Accounts will be increased in the reverse order in which they were exhausted by
the loan, and the loan payments will be allocated to the respective investment
funds in accordance with the investment election then in effect.
7.9 Effect of Severance From Service and Non-Payment -- In the event
that a loan remains outstanding upon the Severance from Service of a
Participant, the Participant will be given the option of continuing to repay the
outstanding loan. In any case where payments on the outstanding loan are not
made within 90 days of the Participant's Severance from Service Date, the amount
of any unpaid principal will be deducted from the Participant's account and
reported as a distribution. If, as a result of Layoff or Authorized Leave of
Absence, a Participant, although still in a Period of Service, is not being
compensated through the Employer's payroll system, loan payments will be
suspended until the earliest of the first pay date after Participant returns to
active employment with the Employer, the Participant's Severance from Service
Date, or the expiration of twelve (12) months from the date of the suspension.
In the event the Participant does not return to active employment with the
Employer, the Participant will be given the option of continuing to repay the
outstanding loan. If the Participant fails to resume payments on the loan, the
outstanding loan will be reported as a taxable distribution. In no event,
however, shall the loan be deducted from the Participant's Account earlier than
the date on which the Participant (i) incurs a Severance from Service, or, (ii)
attains age 59-1/2.
7.10 Loans - Executive Officers -- No loan to an executive officer from
an Account in the Raytheon Common Stock Fund will be effective until the
expiration of six (6) months from the date on which the application for the loan
is received by the Administrator.
ARTICLE VIII - LIMITATIONS OF SECTION 415 OF THE CODE
8.1 Maximum Permissible Amount of a Participant's Annual Addition --
The total for any Limitation Year of the annual additions to a Participant's
Account under this Plan when added to the annual additions to a Participant's
account under any qualified defined contribution plan maintained by the Employer
shall not exceed the lesser of (i) twenty-five percent (25%) of total
compensation from the Employer, and (ii) $30,000 or, if greater, one-fourth of
the defined benefit dollar limitation set forth in Section 415(b)(1) of the Code
as in effect for the Limitation Year.
For purposes of this Section 8.1, the term "annual addition" shall
mean, with respect to any Limitation Year, Matching Contributions, forfeitures,
Qualified Nonelective Contributions and Elective Deferrals to this Plan, plus
the sum of the following amounts allocable for such Plan Year to the
Participant's accounts in all other qualified plans maintained by the Employer
in which he participates: (1) employer contributions (including pre-tax
contributions), (2) forfeitures which have been reallocated to the Participant's
account, (3) Participant after-tax contributions; and (4) amounts described in
Sections 415(l)(1) and 419A(d)(2) of the Code.
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26
For purposes of this Section 8.1, the term "compensation" shall mean
all amounts paid to an Employee for personal services actually rendered to the
Companies and Affiliates, including, but not limited to, wages, salary,
commissions, bonuses, overtime and other premium pay as specified in Reg.
Section 1.415-2(d)(2), but excluding deferred compensation, stock options, and
other distributions which receive special tax treatment as specified in Reg.
Section 1.415-2(D)(3).
8.2 Reduction of Annual Additions -- In the event it is determined that
the annual additions to a Participant's Account for any limitation year would be
in excess of the limitations of Section 8.1, such annual additions shall be
reduced to the extent necessary to bring it within such limitations. If, as a
result of the allocation of forfeitures, a reasonable error in estimating a
Participant's Eligible Compensation, a reasonable error in determining the
amount of Elective Deferrals that may be made with respect to any Participant,
or under other limited facts and circumstances which the Internal Revenue
Service finds justify the availability of the remedies contained herein, the
Administrator shall reduce the annual additions which have been made to a
Participant's Account to the acceptable limit by the following procedures, in
the following order:
(a) by returning to the Participant the excess Elective Deferrals
(and any associated earnings) for the Limitation Year;
(b) to the extent the limitation is still exceeded, excess annual
additions in the Participant's Account (and associated earnings) shall be used
to reduce Elective Deferrals and Matching Contributions for the next Limitation
Year (and succeeding Limitation Years, as necessary) for that Participant if the
Participant is covered by the Plan at the end of such Limitation Year; and
(c) in the event the Participant is not covered by the Plan at the end
of the Limitation Year, any excess annual additions which remain must, as
provided in Reg. ss.1.415-6(b)(6)(ii), be held unallocated in a suspense account
for the Limitation Year and reallocated in the next Limitation Year to all of
the remaining Participants in proportion to their Elective Deferrals in such
Plan Year.
8.3 Coordination with Limitation on Benefit from All Plans --
Notwithstanding any other provisions in this Plan to the contrary, in the case
of a Participant who also participates in any qualified defined benefit plan
which is maintained by the Employer (whether or not terminated), the sum of the
defined benefit plan fraction and the defined contribution plan fraction may not
exceed 1.0 for any Limitation Year. The defined benefit plan fraction for any
Limitation Year is a fraction, the numerator of which is the projected annual
benefit of the Participant under the plan (determined as of the close of the
Limitation Year); and the denominator of which is the lesser of (i) the product
of 1.25, multiplied by the dollar limitation applicable to defined benefit
plans, in effect under applicable law for such Limitation Year; or (ii) the
product of 1.4 multiplied by one hundred percent (100%) of the Participant's
average compensation for the three consecutive calendar years during which he
had the highest aggregate compensation from the Employer. The defined
<PAGE>
27
contribution plan fraction for any Limitation Year is a fraction, the numerator
of which is the sum of the annual additions (as defined in Section 8.1) to the
Participant's Accounts as of the close of the Limitation Year; and the
denominator of which is the sum of the lesser of the following amounts
determined for the current Limitation Year and each prior Limitation Year: (i)
the product of 1.25 multiplied by the dollar limitation applicable to defined
contribution plans, in effect under applicable law for the Limitation Year; or
(ii) the product of 1.4 multiplied by 25% of such Participant's total
compensation for the Limitation Year. In the event that the limitation set forth
above is exceeded, adjustments shall be made in the defined benefit plan.
8.4 This Article VIII shall be effective for Limitation Years
beginning on or after January 1, 1987.
ARTICLE IX - LIMITATIONS OF SECTION 416 OF THE CODE
9.1 General Rule -- In the event that the Plan becomes top heavy with
respect to a Plan Year commencing on or after January 1, 1984, the provisions of
this Article shall apply and shall supersede any conflicting provisions in the
Plan.
9.2 Definitions --
(a) Key Employee: Any Employee or former Employee (and the
Beneficiaries of such Employee) who at any time during the determination period
was an officer of the Employer, an owner (or considered an owner under Section
415(c)(1)(A) of the Code) of one of the ten largest interests in the Employer if
such individual's compensation exceeds 150 percent of the dollar limitation
under Section 415(c)(1)(A) of the Code, a five percent (5%) owner of the
Employer, or a one percent (1%) owner of the Employer who has an annual
compensation of more than $150,000. The determination period of the Plan is the
Plan Year containing the determination date and the four (4) preceding Plan
Years. The determination of who is a Key Employee will be made in accordance
with Section 416(i)(1) of the Code and the regulations thereunder.
(b) Non-Key Employee: Any Employee who is not a Key Employee.
(c) Top-Heavy Ratio:
(i) If the Employer maintains one or more defined benefit plans and
the Employer has never maintained any defined contribution plans (including
any simplified employee pension plan) which has covered or could cover a
Participant in this Plan, the Top-Heavy Ratio is a fraction, the numerator
of which is the sum of the present value of accrued benefits of all Key
Employees as of the determination date (including any part of any accrued
benefit distributed in the five-year period ending on the determination
date), and the denominator of which is the sum of all accrued benefits
(including any part of any accrued benefit distributed in the five-year
period ending on the determination date) of all Participants as of the
determination date.
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28
(ii) If the Employer maintains one or more defined contribution plans
(including any simplified employee pension plan) and the Employer maintains
or has maintained one or more defined benefit plans which have covered or
could cover a Participant in this Plan, the Top-Heavy Ratio is a fraction,
the numerator of which is the sum of account balances under the defined
contribution plans for all Key Employees and the present value of accrued
benefits under the defined benefit plans for all Key Employees, and the
denominator of which is the sum of the account balances under the defined
contribution plans for all Participants and the present value of accrued
benefits under the defined benefit plans for all Participants. Both the
numerator and denominator of the Top-Heavy Ratio are adjusted for any
distribution of an account balance or an accrued benefit made in the
five-year period ending on the determination date and any contribution due
but unpaid as of the determination date.
(iii) For purposes of (i) and (ii) above, the value of account
balances and the present value of accrued benefits will be determined as of
the most recent valuation date that falls within or ends with the 12-month
period ending on the determination date. The account balances and accrued
benefits of a Participant who is not a Key Employee but who was a Key
Employee in a prior year will be disregarded. The calculation of the
Top-Heavy Ratio, and the extent to which distributions, rollovers, and
transfers are taken into account will be made in accordance with Section
416 of the Code and the regulations thereunder. Deductible Employee
contributions will not be taken into account for purposes of computing the
Top-Heavy Ratio. When aggregating plans, the value of account balances and
accrued benefits will be calculated with reference to the determination
dates that fall within the same calendar year. The accrued benefit of a
Participant other than a Key Employee shall be determined under (a) the
method, if any, that uniformly applies for accrual purposes under all
defined benefit plans maintained by the Employer, or (b) if there is no
such method, as if such benefit accrued not more rapidly than the slowest
accrual rate permitted under the fractional rule of Section 411(b)(1)(C) of
the Code.
(d) Permissive aggregation group: The required aggregation group of
plans plus any other plan or plans of the Employer which, when considered as a
group with the required aggregation group would continue to satisfy the
requirements of Sections 401(a)(4) and 410 of the Code.
(e) Required aggregation group: (i) Each qualified plan of the Employer
in which at least one Key Employee participates, and (ii) any other qualified
plan of the Employer which enables a plan described in (i) to meet the
requirements of Sections 401(a)(4) and 410 of the Code.
(f) Determination date: For any Plan Year subsequent to the first Plan
Year, the last day of the preceding Plan Year. For the first Plan Year of the
Plan, the last day of that year.
<PAGE>
29
(g) Valuation date: The last day of each Plan Year.
(h) Present Value: Present Value shall be based only on the interest
rate used by the Administrator to determine compliance with the funding
requirements under the Retirement Act and the mortality rates specified on an
appropriate current unisex table.
9.3 Determination as to Whether the Plan is Top Heavy -- The
Administrator shall determine whether the Plan is top heavy within the meaning
of Section 416. The Plan shall be top heavy for any Plan Year beginning after
December 31, 1983, if, as of the last day of the preceding Plan Year (the
"determination date"), any of the following conditions exist:
(a) If the Top-Heavy Ratio for this Plan exceeds sixty percent (60%)
and this Plan is not part of any required aggregation group or permissive
aggregation group of plans;
(b) If this Plan is a part of a required aggregation group of plans
(but which is not part of a permissive aggregation group) and the Top-Heavy
Ratio for the group of plans exceeds sixty percent (60%); or
(c) If this Plan is a part of a required aggregation group of plans and
part of a permissive aggregation group and the Top-Heavy Ratio for the
permissive aggregation group exceeds sixty percent (60%).
In determining whether the Plan is top heavy for Plan Years commencing
after December 31, 1984, the Account balance of a Participant who has not
performed an Hour of Service for the Employer at any time during the
five-consecutive-year period ending on the determination date shall be excluded
from the calculation of the Top Heavy Ratio.
9.4 Minimum Contribution -- For each Plan Year with respect to which
the Plan is top heavy, the minimum amount allocated under the Plan for the
benefit of each Participant who is a Non-Key Employee and who is otherwise
eligible for such an allocation shall be the lesser of:
(a) three percent (3%) of the Non-Key Participant's compensation
(within the meaning of Section 415 of the Code) for the Plan Year, or
(b) the Non-Key Participant's compensation (as defined in Section 415
of the Code) times a percentage equal to the largest percentage of such
compensation (not exceeding $200,000, $150,000 for Plan Years beginning on or
after January 1, 1994) allocated to any Key Employee for the Plan Year under
this Plan and all other defined contribution plans in the same required
aggregation group. This clause (b) shall not apply to any plan required to be
included in an aggregation group if such plan enables a defined benefit plan
required to be included in such group to meet the requirements of Section
401(a)(4) or Section 410 of the Code.
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This paragraph shall not apply to a Participant covered under a qualified
defined benefit plan maintained by the Employer if the Participant's vested
benefit thereunder satisfies the requirements of Section 416(c) of the Code.
Notwithstanding any other language herein, a Non-Key Eligible Employee may not
fail to receive a defined contribution minimum allocation because either (1)
said Eligible Employee was excluded from participation (or accrues no benefit)
merely because the Employee's compensation is less than the stated amount, or
(2) the Employee is excluded from participation (or accrues no benefit) merely
because of a failure to make Elective Deferrals.
9.5 Accelerated Vesting --
(a) For each Plan Year during which the Plan is top heavy, a vesting
schedule which complies with the requirements of Section 416(b)(1)(a) of the
Code will be placed in effect. Each Participant in a Period of Service during a
Plan Year in which the Plan is top-heavy will be entitled to a Nonforfeitable
right to one hundred percent (100%) of the pension benefit accrued from Employer
contributions provided said Participant has completed a Period of Service with
the Employer of at least three (3) years.
(b) In the event that an accelerated vesting schedule must be
placed in effect in accordance with subparagraph (a) of this Section 9.5 and the
Plan is later determined not to be top heavy, no vesting schedule change shall
be made which shall have the effect of providing a benefit to a Participant less
than the accrued cumulative benefit to which the Participant was otherwise
entitled as of the date of said vesting schedule change pursuant to said
subparagraph (a).
ARTICLE X - THE TRUST FUND
10.1 Trust Agreement -- During the period in which this Plan remains in
existence, the Employer or any successor thereto shall maintain in effect a
Trust Agreement with a corporate trustee as Trustee, to hold, invest, and
distribute the Trust Fund in accordance with the terms of such Trust Agreement.
10.2 Investment of Accounts -- The Trustee shall invest and reinvest
the Participant's accounts in investment options as defined in Section 4.1 as
directed by the Administrator or its delegate in writing. The Administrator
shall issue such directions in accordance with the investment options selected
by the Participants which shall remain in force until altered in writing in
accordance with Sections 4.2 and 4.3.
10.3 Expenses -- Expenses of the Plan and Trust shall be paid from
the Trust.
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ARTICLE XI - ADMINISTRATION OF THE PLAN
11.1 General Administration -- The general administration of the Plan
shall be the responsibility of Raytheon Company (or any successor thereto) which
shall be the Administrator and Named Fiduciary for purposes of the Retirement
Act. The Company shall have the authority, in its sole discretion, to construe
the terms of the Plan and to make determinations as to eligibility for benefits
and as to other issues within the "Responsibilities of the Administrator"
described in Article XI, Section 11.2. All such determinations of the Company
shall be conclusive and binding on all persons.
11.2 Responsibilities of the Administrator -- The Administrator shall
assign responsibility for performance of all necessary administrative duties,
including the following:
(a) Determination of all questions which may arise under the Plan with
respect to eligibility for participation and administration of accounts,
including without limitation questions with respect to membership, vesting,
loans, withdrawals, accounting, status of accounts, stock ownership and voting
rights, and any other issue requiring interpretation or application of the Plan.
(b) Reference of appropriate issues to the Offices of the Executive
Vice President - Chief Financial Officer, the Senior Vice President Treasurer,
the Director of Tax Affairs, the Vice President General Counsel, and the Vice
President - Human Resources, respectively, for advice and counsel.
(c) Establishment of procedures required by the Plan, such as
notification to Employees as to joining the Plan, selecting and changing
investment options, suspending deferrals, exercising voting rights in stock,
withdrawing and borrowing account balances, designation of beneficiaries,
election of method of distribution, and any other matters requiring a uniform
procedure.
(d) Submission of necessary amendments to supplement omissions from
the Plan or reconcile any inconsistency therein.
(e) Filing appropriate reports with the Government as required by law.
(f) Appointment of a Trustee or Trustees and investment managers.
(g) Review at appropriate intervals of the performance of the
Trustee and such investment managers as may have been designated.
(h) Appointment of such additional Fiduciaries as deemed necessary for
the effective administration of the Plan, such appointments to be by written
instrument.
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32
11.3 Liability for Acts of Other Fiduciaries -- Each Fiduciary shall be
responsible only for the duties allocated or delegated to said Fiduciary, and
other Fiduciaries shall not be liable for any breach of fiduciary responsibility
with respect to any act or omission of any other Fiduciary unless:
(a) The Fiduciary knowingly participates in or knowingly attempts to
conceal the act or omission of such other Fiduciary and knows that such act or
omission constitutes a breach of fiduciary responsibility by the other
Fiduciary;
(b) The Fiduciary has knowledge of a breach of fiduciary
responsibility by the other Fiduciary and has not made reasonable efforts under
the circumstances to remedy the breach; or
(c) The Fiduciary's own breach of his specific fiduciary
responsibilities has enabled another Fiduciary to commit a breach. No Fiduciary
shall be liable for any acts or omissions which occur prior to his assumption of
Fiduciary status or after his termination from such status.
11.4 Employment by Fiduciaries -- Any Fiduciary hereunder may employ,
with the written approval of the Administrator, one or more persons to render
service with regard to any responsibility which has been assigned to such
Fiduciary under the terms of the Plan including legal, tax, or investment
counsel and may delegate to one or more persons any administrative duties
(clerical or otherwise) hereunder.
11.5 Recordkeeping -- The Administrator shall keep or cause to be kept
any necessary data required for determining the account status of each
Participant. In compiling such information, the Administrator may rely upon its
employment records, including representations made by the Participant in the
employment application and subsequent documents submitted by the Participant to
the Employer. The Trustee shall be entitled to rely upon such information when
furnished by the Administrator or its delegate. Each Employee shall be required
to furnish the Administrator upon request and in such form as prescribed by the
Administrator, such personal information, affidavits and authorizations to
obtain information as the Administrator may deem appropriate for the proper
administration of the Plan, including but not limited to proof of the Employee's
date of birth and the date of birth of any person designated by a Participant as
a Beneficiary.
11.6 Claims Review Procedure -- The Administrator shall make all
determinations as to the right of any person to Accounts under the Plan. Any
such determination by the Administrator shall be made pursuant to the following
procedure:
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33
Step 1. Claims with respect to an Account should be filed by a claimant
as soon as practicable after claimant knows or should know that a dispute has
arisen with respect to an Account, but at least thirty (30) days prior to the
claimant's actual retirement date or, if applicable, within sixty (60) days
after the death, Disability or Severance from Service of the Participant whose
account is at issue, by mailing a copy of the claim to the Benefits and Services
Department, Raytheon Company, 141 Spring Street, Lexington, Massachusetts 02173.
Step 2. In the event that a claim with respect to an Account is wholly
or partially denied by the Administrator, the Administrator shall, within ninety
(90) days following receipt of the claim, so advise the claimant in writing
setting forth: the specific reason or reasons for the denial; specific reference
to pertinent Plan provisions on which the denial is based; a description of any
additional material or information necessary for the claimant to perfect the
claim; an explanation as to why such material or information is necessary; and
an explanation of the Plan's claim review procedure.
Step 3. Within sixty (60) days following receipt of the denial of a
claim with respect to an Account, a claimant desiring to have the denial
appealed shall file a request for review with the Administrator by mailing a
copy thereof to the address shown in Step 1.
Step 4. Within thirty (30) days following receipt of a request for
review, the Administrator shall provide the claimant a further opportunity to
present his or her position. At the Administrator's discretion, such
presentation may be through an oral or written presentation. Prior to such
presentation, the claimant shall be permitted the opportunity to review
pertinent documents and to submit issues and comments in writing. Within a
reasonable time following presentation of the claimant's position, which usually
should not exceed thirty (30) days, the Administrator shall inform the claimant
in writing of the decision on review setting forth the reasons for such decision
and citing pertinent provisions in the Plan.
The Administrator is the fiduciary to whom the Plan grants full
discretion, with the advice of counsel, to interpret the Plan; to determine
whether a claimant is eligible for benefits; to decide the amount, form and
timing of benefits; and to resolve any other matter under the Plan which is
raised by a claimant or identified by the Administrator. All questions arising
from or in connection with the provisions of the Plan and its administration,
not herein provided to be determined by the Board of Directors, shall be
determined by the Administrator, and any determination so made shall be
conclusive and binding upon all persons affected thereby.
11.7 Indemnification of Directors and Employees -- The Companies shall
indemnify by insurance or otherwise any Fiduciary who is a director, officer or
employee of the Employer, his heirs and legal representatives, against all
liability and reasonable expense, including counsel fees, amounts paid in
settlement and amounts of judgments, fines or penalties, incurred or imposed
upon him in connection with any claim, action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of acts or omissions
in his capacity as a Fiduciary hereunder, provided that such act or omission is
not the result of gross negligence or willful misconduct. The Companies may
indemnify other Fiduciaries, their heirs and legal representatives, under the
circumstances, and subject to the limitations set forth in the preceding
sentence, if such indemnification is determined by the Board of Directors to be
in the best interests of the Companies.
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34
11.8 Immunity from Liability -- Except to the extent that Section
410(a) of the Retirement Act prohibits the granting of immunity to Fiduciaries
from liability for any responsibility, obligation, or duty imposed under Title
I, Subtitle B, Part 4, of said Act, an officer, employee, member of the Board of
Directors of the Employer or other person assigned responsibility under this
Plan shall be immune from any liability for any action or failure to act except
such action or failure to act which results from said officer's, Employee's,
Participant's or other person's own gross negligence or willful misconduct.
ARTICLE XII - AMENDMENT OR TERMINATION OF PLAN
12.1 Right to Amend or Terminate Plan
Each of the Companies reserves the right at any time or times, by
action of its Board of Directors, to modify, amend or terminate the Plan in
whole or in part as to its Employees, in which event a certified copy of the
resolution of the Board of Directors, authorizing such modification, amendment
or termination shall be delivered to the Trustee and to the other Companies
whose Employees are covered by this Plan, provided, however, no amendment to the
Plan shall be made which shall:
(a) deprive any Participant of amounts allocated to his Account
prior to the date of the amendment;
(b) except as provided in Section 3.11, make it possible for any part
of the corpus or income of the Trust Fund to be used for or diverted to purposes
other than the exclusive benefit of the Participants or their beneficiaries
prior to the satisfaction of all liabilities with respect to such Participant or
their Beneficiaries;
(c) modify the vesting schedule and deprive a Participant of his
Nonforfeitable rights to amounts allocated to his account prior to the date of
the amendment. Further, if the vesting schedule of the Plan is amended, or the
Plan is amended to directly or indirectly affect a Nonforfeitable percentage of
a Participant's Account, each Participant with a Period of Service of at least
three years may elect, within a reasonable period after the adoption of the
amendment to have his nonforfeitable percentage computed under the Plan without
regard to such amendment. The period during which the election may be made shall
commence with the date the amendment is adopted or the change made and shall end
on the latest of:
(i) 60 days after the amendment is adopted;
(ii) 60 days after the amendment becomes effective, or
(iii) 60 days after the Participant is issued written notice of the
amendment;
(d) increase the duties of liabilities of the Trustee without its
consent.
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35
Notwithstanding the foregoing provisions of this Section or any other provisions
of this Plan, any modification or amendment of the Plan may be made
retroactively if necessary or appropriate to conform the Plan with, or to
satisfy the conditions of, the Retirement Act, the Code, or any other law,
governmental regulation or ruling.
Any termination, modification or amendment of the Plan shall be subject
to approval by the Board of Directors of the Company.
12.2 Maintenance of Plan -- The Company has established the Plan with
the bona fide intention and expectation that it will be able to make its
contributions indefinitely, but the Company is not and shall not be under any
obligation or liability whatsoever to continue its contributions or to maintain
the Plan for any given length of time.
12.3 Termination of Plan and Trust -- The Plan and Trust hereby created
shall terminate upon the occurrence of any of the following events:
(a) Delivery to the Trustee of a notice of termination executed by
the Company specifying the date as of which the Plan and Trust shall terminate;
(b) Adjudication of the Company as bankrupt or general assignment by
the Company to or for the benefit of creditors or dissolution of the Company;
In the event of the complete termination of this Plan or the complete
discontinuance of Matching Contributions under it (but a rescission under
Section 13.2 for failure to qualify initially is not such a termination or
complete discontinuance), the rights of each Participant to the amounts then
credited to his or her Account shall be Nonforfeitable. In the event of the
partial termination of this Plan, the rights of each Employee (as to whom the
Plan is considered terminated) to the amounts then credited to his or her
Account, shall be Nonforfeitable. Whether or not there is a complete or partial
termination of this Plan shall be determined under the regulations promulgated
pursuant to the Internal Revenue Code. To the extent this paragraph is
inconsistent with any provisions contained elsewhere in this Plan or in the
Trust which forms a part of this Plan, this paragraph shall govern. Upon such
termination of the Plan and Trust, after payment of all expenses and
proportional adjustment of accounts to reflect such expenses, fund losses or
profits, and reallocations to the date of termination, each Participant or
former Participant shall, subject to the requirements of Section 401(k)(10) of
the Code and Reg. Section1.401(k)-1(d)(3), be entitled to receive any amounts
then credited to his or her Account in the Trust Fund. The Trustee may make
payments in cash or, to the extent permitted by Section 6.6, in stock.
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36
ARTICLE XIII - ADDITIONAL PROVISIONS
13.1 Effect of Merger, Consolidation or Transfer -- In the event of any
merger or consolidation with or transfer of assets or liabilities to any other
plan or to this Plan, each Participant of the Plan shall be entitled to a
benefit immediately after the merger, consolidation or transfer, which is equal
to or greater than the benefit he or she would have been entitled to receive
immediately before the merger, consolidation or transfer (if the Plan had been
terminated).
13.2 Necessity of Initial Qualification -- This Plan is established
with the intent that it shall qualify under Sections 401(a) and 401(k) of the
Code as that section exists at the time the Plan is established. If the Internal
Revenue Service determines that the Plan initially fails to meet those
requirements, then within thirty (30) days after the date of such determination
all of the assets of the Trust Fund held for the benefit of Participants and
their beneficiaries shall be distributed equitably among the contributors to the
Plan in proportion to their contributions, and the Plan shall be considered to
be rescinded and of no force or effect, unless such inadequacy is removed by a
retroactive amendment pursuant to the Code. Any nonvested Matching Contributions
and earnings attributable thereto shall be returned to the Companies.
13.3 Limitation of Assignment -- No account under the Plan shall be
subject in any manner to attachment, anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, or the vesting of rights in any
person by operation of law or otherwise except as provided under this Plan,
including but not limited to the Trustee or Receiver in Bankruptcy, and any
attempt so to anticipate, alienate, sell, transfer, assign, encumber or charge
the same shall be void, nor shall any such benefit be in any way liable for or
subject to the debts, contracts, liabilities, engagements or torts of any person
entitled to such benefit. If any Participant is adjudicated bankrupt, or
attempts to anticipate, alienate, sell, transfer, assign, pledge, encumber or
charge any benefit under the Plan, then such benefit shall, in the discretion of
the Administrator, cease and terminate and in that event the Trustee shall hold
or apply the same or any part thereof to or for the benefit of such Participant
in such manner as the Administrator may direct.
Notwithstanding the foregoing, the Administrator is authorized to
comply with a domestic relations order determined by it to be a qualified
domestic relations order as defined in Section 414(p) of the Code. A
distribution may be made to an alternate payee under a qualified domestic
relations order in the form of a lump sum payment at the time specified in such
order, regardless of any restrictions on the commencement of the distribution
that then may apply to the Participant to whom the order relates.
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13.4 Limitation of Rights of Employees -- This Plan is strictly a
voluntary undertaking on the part of the Companies and shall not be deemed to
constitute a contract between any of the Companies and any Employee, or to be a
consideration for, or an inducement to, or a condition of the employment of any
Employee. Nothing contained in the Plan shall be deemed to give any Employee the
right to be retained in the service of any of the Companies or shall interfere
with the right of any of the Companies to discharge or otherwise terminate the
employment of any Employee of the Company at any time. No Employee shall be
entitled to any right or claim hereunder except to the extent such right is
specifically fixed under the terms of the Plan.
13.5 Construction -- The Plan shall be construed, regulated, and
administered under the laws of the Commonwealth of Massachusetts, except to the
extent that the Retirement Act otherwise requires. In the event that any
provision of this Plan is inconsistent with any provision in the Retirement Act,
the provision in the Retirement Act shall be deemed to be controlling.
13.6 Merger of United Engineers & Constructors, Inc. Profit Sharing
Plan and the United Engineers & Constructors, Inc. Boston Employees Profit
Sharing Plan -- Effective as of December 31, 1994, or such earlier date as is
determined to be administratively feasible (the "Merger Date"), the United
Engineers & Constructors, Inc. Profit Sharing Plan and the United Engineers &
Constructors, Inc. Boston Employees Profit Sharing Plan (the "Merged Plans")
shall be merged into this Plan. All assets held under the trust agreements for
each of the Merged Plans shall be transferred to the Trustee, such transfer to
be effective as of the Merger Date. Amounts held in the various investment
accounts under the trust agreements for each of the Merged Plans shall be
transferred to the investment accounts under the Trust in accordance with
procedures established by the Administrator. Upon such transfer, the assets of
the Merged Plans shall become assets of this Plan for all purposes hereunder,
effective as of the Merger Date, and this Plan shall assume all the liabilities
of the Merged Plans, and benefits shall thereafter be allocated and paid
pursuant to the provisions of this Plan. All participants in the Merged Plans
shall remain fully vested in their accounts which are transferred to this Plan.
All withdrawal and distribution options under each of the Merged Plans shall be
made available under this Plan with respect to the transferred accounts to the
extent required by Section 411(d)(6) of the Code. Any amendments to this Plan
which are effective prior to January 1, 1994 shall be considered as amendments
to each of the Merged Plans as well.
13.7 Transfer of Assets from Raytheon Subsidiary Savings and Investment
Plan -- Effective as of December 31, 1994, or such earlier date as is
administratively feasible (the "Transfer Date") the account balances of those
participants under the Raytheon Subsidiary Savings and Investment Plan who are
employed on the non-exempt and exempt salaried payrolls of Harbert-Yeargin, Inc.
(the "Transferred Accounts") shall be transferred into this Plan. Assets equal
to the Transferred Accounts shall be transferred from the Raytheon Subsidiary
Savings and Investment Plan to the Trustee, such transfer to be effective as of
the Transfer Date. Amounts held in the various investment accounts under the
Raytheon Subsidiary Savings and Investment Plan and Trust shall be transferred
to the investment accounts under the Trust in accordance with procedures
established by the Administrator. Upon such transfer, the assets transferred
from the Raytheon Subsidiary Savings and Investment Plan shall become assets of
this Plan for all purposes hereunder, effective as of the Transfer Date, and
this Plan shall assume all the liabilities of the Raytheon Subsidiary Savings
and Investment Plan for the Transferred Accounts, and benefits shall thereafter
be allocated and paid pursuant to the provisions of this Plan. All participants
in the Raytheon Subsidiary Savings and Investment Plan whose accounts are
transferred to this Plan shall remain fully vested in their Transferred
Accounts. All withdrawal and distribution options under the Raytheon Subsidiary
Savings and Investment Plan shall be made available under this Plan with respect
to the Transferred Accounts to the extent required by Section 411(d)(6) of the
Code.
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ARTICLE XIV - DEFINITIONS
The following terms have the meaning specified below unless the context
indicates otherwise:
14.1 "Account" means the entire interest of a Participant in the Trust
Fund. A Participant's Account shall consist of an Employee Account and a
Matching Contribution Account.
14.2 "Administrator" means Raytheon Company.
14.3 "Affiliate" means a trade or business which together with any of
the Companies is a member of (i) a controlled group of corporations within the
meaning of Section 414(b) of the Code; (ii) a group of trades or businesses
(whether or not incorporated) under common control as defined in Section 414(c)
of the Code, or (iii) an affiliated service group as defined in Section 414(m)
of the Code, or which is an entity otherwise required to be aggregated with the
Companies pursuant to Section 414(o) of the Code. For purposes of Article VIII,
the determination of controlled groups of corporations and trades or businesses
under common control shall be made after taking into account the modification
required under Section 415(h) of the Code. This section shall be effective as of
January 1, 1987.
14.4 "Authorized Leave of Absence" means an absence approved by the
Companies on a uniform and nondiscriminatory basis not exceeding one (1) year
for any of the following reasons: illness of Employee or relative, death of
relative, education of Employee, or personal or family business of an
extraordinary nature, provided in each case that the Employee returns to the
service of the Companies within the time period specified by the Companies.
14.5 "Authorized Military Leave of Absence" means any absence due to
service in the Armed Forces of the United States, upon completion of which the
Employee is entitled under any applicable Federal law to reemployment at the
termination of such military service, provided that he returns to the service of
the Companies within the period provided for by such applicable Federal law or
such further period as may be established by the Administrator. As used in this
paragraph, the term "Armed Forces of the United States" excludes the Merchant
Marine.
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14.6 "Beneficiary" means the person designated by the Participant to
receive the value of his Account in the event of his death; provided, however,
that if a Participant with a spouse designates a Beneficiary other than his
spouse, said designation shall not take effect unless the spouse consents in
writing to such designation and said spousal consent acknowledges the effect of
said designation and is witnessed by a representative of the Plan or a notary
public. Said spousal consent shall be effective only with respect to the spouse
granting such consent, and shall not be required if the Participant can
establish that there is no spouse, that the spouse cannot be located, or that
other conditions exist as may be prescribed by regulations issued by the
Secretary of the Treasury. If there is no Beneficiary designated by the
Participant or surviving at the death of the Participant, payment of his Account
shall be made in accordance with Section 6.6. Subject to the foregoing, a
Participant may designate a new beneficiary at any time by filing with the
Administrator a written request for such change on a form prescribed by the
Administrator. Such change shall become effective only upon receipt of the form
by the Administrator, but upon such receipt of the change shall relate back to
and take effect as of the date the Participant signed such request, whether or
not the Participant is living at the time of such receipt, provided, however,
that neither the Trustee nor the Administrator shall be liable by reason of any
payment of the Participant's Account made before receipt of such form.
14.7 "Board of Directors" means the Board of Directors of Raytheon Company.
14.8 "Business Day" means a day on which Fidelity is open for general
business.
14.9 "Code" means the Internal Revenue Code of 1986, as amended.
14.10 "Company" means Raytheon Company but shall not include a
Division, Operation or similar cohesive group of Raytheon Company excluded by
the Board of Directors of Raytheon Company.
14.11 "Companies" means the Company and any Subsidiary of the Company
which elects through an authorized officer to participate in the Plan on account
of its Employees, provided that participation in the Plan by such a Subsidiary
is approved by the Board of Directors of the Company, or an officer to whom
authority to approve participation by a subsidiary is delegated by the Board of
Directors, but shall not include any Division, Operation or similar cohesive
group of a participating Subsidiary excluded by the Board of Directors of the
Subsidiary and the Board of Directors of the Company.
14.12 "Designated Hourly Payroll" means an hourly payroll or portion
thereof, processed in the United States, of one of the Companies which is
designated in writing by the Administrator in accordance with nondiscriminatory
and uniform rules as a payroll the Employees on which are eligible to
participate in this Plan.
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14.13 "Disability" means that the Participant is totally and
permanently disabled by bodily injury or disease so as to be prevented from
engaging in any occupation for compensation or profit. The determination of
disability shall be made by the Administrator with the aid of competent medical
advice. It shall be based on such evidence as the Administrator deems necessary
to establish disability or the continuation thereof.
14.14 "Early Retirement Date" means the first day of the month
subsequent to the earliest date on which the Participant has both attained age
55 and completed a Period of Service of ten (10) years.
14.15 "Elective Deferral" means a voluntary reduction of Participant's
compensation in accordance with Section 3.2 hereof.
14.16 "Eligible Compensation" means the base pay, supervisory
differentials, shift premiums and, effective January 1, 1985, sales commissions,
excluding all other earnings from any source. Effective for Plan Years beginning
on or after January 1, 1989 and prior to December 31, 1993, in no event shall
the amount of Eligible Compensation taken into account under the Plan for any
Plan Year exceed $200,000 (or such larger amount as the Secretary of the
Treasury may determine for such Plan Year under Section 401(a)(17) of the Code).
Effective for Plan Years beginning on or after January 1, 1994, in no event
shall the amount of Eligible Compensation taken into account under the Plan for
any Plan Year exceed $150,000 (or such larger amount as the Secretary of the
Treasury may determine for such Plan Year under Section 401(a)(17) of the Code).
For purposes of this limitation only, in determining compensation the rules of
Section 414(q)(6) of the Code shall apply, except that in applying such rules,
the term "family" shall include only the spouse of the Participant and any
lineal descendants of the Participant who have not attained age 19 before the
close of the Plan Year.
14.17 "Eligible Employee" means any Employee on a U.S. based Salaried
or Designated Hourly Payroll of one of the Companies, excluding Employees in
cooperative studies and intern programs and, effective January 1, 1987, a person
who is a Leased Employee.
14.18 "Employee" means any person performing compensated services for
the Employer who meets the definition of "Employee" for income tax withholding
purposes under Treas. Regs. 31.3401(c)-1 and any person who is a Leased
Employee. This section shall be effective as of January 1, 1987.
14.19 "Employee Account" means that portion of Participant's Account
which is attributable to Elective Deferrals, adjustments for withdrawals and
distributions, and the earnings and losses attributable thereto.
14.20 "Employer" means Raytheon Company and any Affiliate thereof.
14.21 "Employment Commencement Date" is the date on which the Employee
first performs an Hour of Service with the Employer.
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14.22 "Enrollment Agreement" means a salary reduction agreement
pursuant to which an Eligible Employee voluntarily joins the Plan and authorizes
deferral of a portion of the Participant's Eligible Compensation.
14.23 "Fidelity" means Fidelity Investments, the recordkeeper for
the Plan.
14.24 "Fiduciary" means a named fiduciary and any other person or group
of persons who assumes a fiduciary responsibility within the meaning of the
Retirement Act under this Plan whether by expressed delegation or otherwise but
only with respect to the specific responsibilities of each for the
administration of the Plan and Trust Fund.
14.25 "Higher Paid Eligible Employee" means an individual described in
Section 414(q) of the Code, after giving effect to subsection (12) thereof, and
any regulation, notice or other guidance issued by the Internal Revenue Service
thereunder. The determination of whether an individual is a Higher Paid Eligible
Employee may be made by the Administrator on the basis of any elective provision
permitted under such regulation, notice or other guidance. In general, an
Employee will be considered a Higher Paid Eligible Employee if such individual:
(a) was a five percent owner as defined in Section 416(i)(1)(iii)
of the Code at any time during the current or preceding Plan Year;
(b) received compensation in excess of $50,000 during the current or
preceding Plan Year (adjusted annually for increases in the cost of living in
accordance with Section 415(d) of the Code); or
(c) was at any time an officer within the meaning of Section 416(i) of
the Code during the preceding Plan Year, and who received compensation in the
current or preceding Plan Year greater than 50 percent of the dollar limitation
in effect under Section 415(b)(1)(A) of the Code for such Plan Year.
Notwithstanding the foregoing, no more than 50 or, if lesser, the greater of 3
employees or 10 percent of the Employees shall be treated as officers.
(d) An Employee who is not described in paragraph (b) or (c) above for
the preceding Plan Year shall not be treated as described in paragraph (b) or
(c) unless such Employee is one of the 100 Employees who receive the most
compensation from the Employer during the Plan Year.
(e) A former Employee shall be treated as a Higher Paid Eligible
Employee if such former Employee had a separation year prior to the Plan Year
and was a Higher Paid Eligible Employee for either (1) such Employee's
separation year or (2) any Plan Year ending on or after the Employee's 55th
birthday. A separation year is the Plan Year in which the Employee separates
from service.
(f) Notwithstanding anything to the contrary in this Plan, Sections
414(b), (c), (m), (n), and (o) of the Code are applied prior to determining
whether an Employee is a High Paid Eligible Employee.
<PAGE>
42
(g) "Non-Higher Paid Eligible Employee" shall mean an Employee who is
neither a Higher Paid Eligible Employee nor a family member (within the meaning
of Section 414(q)(6) of the Code).
(h) "Compensation" shall mean the Employee's wages which are required
to be reported on IRS Form W-2, increased by any Elective Deferrals made by the
Companies to the Plan on behalf of the Employee and any pre-tax elective
contributions made by the Companies which are excludible from the Employee's
income under Section 125 of the Code.
14.26 (a) "Hour of Service" means an hour with respect to which any
Employee is paid, or entitled to payment, for the performance of duties for the
Employer during the applicable computation period.
(b) "Hour of Service" shall include an hour for which the Employee is
entitled to credit under subparagraph (a) hereof as a result of employment:
(i) with a predecessor company substantially all of the assets of
which have been acquired by the Employer, provided that where
only a portion of the operations of a company have been
acquired, only service with said acquired portion prior to the
acquisition will be included and that the Employee was
employed by said predecessor company at the time of
acquisition; or
(ii) with a Division, Operation or similar cohesive group of the
Employer excluded from participation in the Plan.
(c) To the extent applicable, the rules set forth in 29 CFR Sections
2530.200b-2(b) and (c) for computing an "Hour of Service" are incorporated
herein by reference.
14.27 "Layoff" means an involuntary interruption of service due to
reduction of work force with or without the possibility of recall to employment
when conditions warrant.
14.28 "Leased Employee" means any person (other than an Employee) who,
pursuant to an agreement between the Employer and any other person, has
performed services for the Employer (or any related person as provided in
Section 414(n)(6) of the Code) on a substantially full time basis for a period
of at least one year and such services are of the type historically performed by
employees in the business field of the Employer. Leased Employees are not
eligible to participate in the Plan. Notwithstanding the foregoing, if such
"Leased Employees" constitute less than 20% of the nonhighly compensated
workforce of the Employer within the meaning of Section 414(n)(5)(C)(ii) of the
Code, the term "Employee" shall not include Leased Employees covered by a plan
described in Section 414(n)(5) of the Code. This section shall be effective as
of January 1, 1987.
<PAGE>
43
14.29 "Limitation Year" means the calendar year or any other
12-consecutive-month period adopted for all qualified deferred compensation
plans of the Company pursuant to a written resolution adopted by the Company.
14.30 "Matching Contribution" means contribution made to the Trust
in accordance with Section 3.7 hereof.
14.31 "Matching Contribution Account" means that portion of
Participant's Account which is attributable to Matching Contributions by the
Companies, adjustments for withdrawals and distributions, and the earnings and
losses attributable thereto.
14.32 "Net Annual Profits" means the current earnings of the Companies
for the Plan Year determined in accordance with generally accepted accounting
principles before federal and local income taxes and before contributions to
this Plan or any other qualified plan.
14.33 "Net Profits" means the accumulated earnings of the Companies at
the end of the Plan Year determined in accordance with generally accepted
accounting principles. For the purposes hereof "accumulated earnings at the end
of the Plan Year" shall include Net Annual Profits for such Plan Year calculated
before any deduction is taken for depreciation, if any.
14.34 "Nonforfeitable" means an unconditional right to an Account
balance or portion thereof determined as of the applicable date of determination
under this Plan.
14.35 "Normal Retirement Age" means the Participant's sixty-fifth
(65th) birthday.
14.36 "Participant" means an individual who is enrolled in the Plan
pursuant to Article II and has not withdrawn the entire amount of his or her
Account.
14.37 "Pay Period" means a scheduled period for payment of wages or
salaries.
14.38 "Period of Participation" means that portion of a Period of
Service during which the Eligible Employee was a Participant, and had an
Employee Account in the Plan. For the purpose of determining a Period of
Participation, participation in the Raytheon Savings and Investment Plan for
Specified Hourly Payroll Employees and the Raytheon Employee Savings and
Investment Plan shall be considered as participation in this Plan.
14.39 "Period of Service" means the period of time beginning on the
Employee's Employment Commencement Date or Reemployment Commencement Date,
whichever is applicable, and ending on the Employee's Severance from Service
Date.
14.40 "Period of Severance" means the period of time beginning on the
Employee's Severance from Service Date and ending on the Employee's Reemployment
Commencement Date.
<PAGE>
44
14.41 "Plan" means the Raytheon Savings and Investment Plan as amended
from time to time.
14.42 "Plan Year" means a calendar year, or a portion thereof occurring
prior to the termination of the Plan.
14.43 "Reemployment Commencement Date" means the first date on which
the Employee performs an Hour of Service following a Period of Severance which
is excluded under Section 5.3 in determining whether a Participant has a
Nonforfeitable right to his or her Matching Contribution Account.
14.44 "Retirement" means a Severance from Service when the Participant
has either attained age 55 and completed a Period of Service of at least ten
(10) years or has attained Normal Retirement Age.
14.45 "Retirement Act" means the Employee Retirement Income Security
Act of 1974, including any amendments thereto.
14.46 "Rollover Contribution Account" means that portion of a
Participant's Account which is attributable to rollover contributions received
pursuant to Section 3.10, adjustments for withdrawals and distributions, and the
earnings and losses attributable thereto.
14.47 "Salaried Payrolls" means the nonexempt salaried and the exempt
salaried payrolls which are processed in the United States.
14.48 "Severance from Service" means the termination of employment by
reason of quit, Retirement, discharge, death or failure to return from Layoff,
Authorized Leave of Absence, Authorized Military Leave of Absence or Disability.
14.49 "Severance from Service Date" means the earlier of:
(a) the date on which an Employee quits, retires, is discharged,
or dies; or
<PAGE>
45
(b) except as provided in paragraphs (c) and (d) hereof, the first
anniversary of the first date of a period during which an Employee is absent for
any reason other than quit, retirement, discharge or death, provided that, on an
equitable and uniform basis, the Administrator may determine that, in the case
of a Layoff as the result of a permanent plant closing, the Administrator may
designate the date of Layoff or other appropriate date prior to the first
anniversary of the first date of absence as the Severance From Service Date; or
(c) in the case of an Authorized Military Leave of Absence from which
the Employee does not return prior to expiration of recall rights, "Severance
from Service Date" means the first day of absence because of the leave; or
(d) in the case of an absence due to Disability, "Severance from
Service Date" means the earlier of the first anniversary of the first day of
absence because of the Disability or the date of termination of the Disability;
or
(e) in the case of an Employee who is discharged or quits (i) by reason
of the pregnancy of the Employee, (ii) by reason of the birth of a child to the
Employee, (iii) by reason of the placement of a child with the Employee in
connection with the adoption of such child by the Employee or (iv) for purposes
of caring for such child for a period beginning immediately following such birth
or placement, "Severance from Service Date," for the sole purpose of determining
the length of a Period of Service, shall mean the first anniversary of the quit
or discharge; or
(f) in the case of an Employee who is absent from service beyond the
first anniversary of the first day of absence (i) by reason of the pregnancy of
the Employee, (ii) by reason of the birth of a child to the Employee, (iii) by
reason of the placement of a child with the Employee in connection with the
adoption of such child by the Employee or (iv) for purposes of caring for such
child for a period beginning immediately following such birth or placement, the
Severance from Service Date shall be the second anniversary of the first day of
such absence. The period between the first and second anniversaries of the first
day of absence is neither a Period of Service nor a Period of Severance.
<PAGE>
46
14.50 "Subsidiary" means any corporation designated by the Board of
Directors as a Subsidiary, provided that for the purposes of the Plan no
corporation shall be considered a Subsidiary during any period when less than
fifty percent (50%) of its outstanding voting stock is beneficially owned by the
Company.
14.51 "Surviving Spouse" means a lawful spouse surviving the
Participant as of the date of Participant's death.
14.52 "Trust Agreement" means the agreement between the Company and the
Trustee, and any successor agreement made and entered into for the establishment
of a trust fund of all contributions which may be made to the Trustee under the
Plan.
14.53 "Trustee" means the Trustee and any successor trustees under
the Trust Agreement.
14.54 "Trust Fund" means the cash, securities, and other property held
by the Trustee for the purposes of the Plan.
14.55 "Valuation Date" means each Business Day.
14.56 Words used in either the masculine or feminine gender shall be
read and construed so as to apply to both genders where the context so warrants.
Words used in the singular shall be read and construed in the plural where they
so apply.
<PAGE>
1
EXHIBIT 99.2
RAYTHEON SAVINGS AND INVESTMENT PLAN
FOR SPECIFIED HOURLY PAYROLL EMPLOYEES
FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
The supplemental schedules required to accompany the Plan's Form 5500 are not
required since the Plan's assets are held in a Master Trust. Accordingly,
detailed financial information, including the supplemental schedules, must be
filed separately with the Department of Labor by the plan administrator.
<PAGE>
2
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Raytheon Company:
We have audited the accompanying statements of net assets available for plan
benefits of the Raytheon Savings and Investment Plan for Specified Hourly
Payroll Employees as of December 31, 1995 and 1994, and the related statements
of changes in net assets available for plan benefits for each of the three years
in the period ended December 31, 1995. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the
Raytheon Savings and Investment Plan for Specified Hourly Payroll Employees as
of December 31, 1995 and 1994, and the changes in net assets available for plan
benefits for each of the three years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles.
Boston, Massachusetts
May 31, 1996
<PAGE>
3
RAYTHEON SAVINGS AND INVESTMENT PLAN
FOR SPECIFIED HOURLY PAYROLL EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
as of December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Assets:
Investments, at contract value (Note E) $124,280,968 $125,437,662
Investments, at fair value (Notes B, F and I) 129,400,786 85,370,556
Receivables:
Accrued investment income 3,245 1,718
Employee deferrals 478,058 298,819
Employer contributions 175,162 88,525
Cash and cash equivalents 1,980,998 2,449,889
-------------- --------------
Total assets 256,319,217 213,647,169
-------------- --------------
Liabilities:
Payable for outstanding purchases - 51,546
Forfeitures 73,581 61,529
Accrued expenses 6,847 27,818
-------------- --------------
Total liabilities 80,428 140,893
-------------- --------------
Net assets available for plan benefits $256,238,789 $213,506,276
============== ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
4
RAYTHEON SAVINGS AND INVESTMENT PLAN
FOR SPECIFIED HOURLY PAYROLL EMPLOYEES
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN
BENEFITS
for the years ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Additions to net assets attributable to:
Investment income (Notes B, E and I):
Change in net appreciation (depreciation)
of investments $ 22,581,631 $ (3,441,573) $ 7,282,777
Interest 8,314,008 7,408,632 7,379,266
Dividends 1,714,175 1,392,678 1,005,307
Capital gains distributions 1,186,179 1,631,540 236,720
-------------- ---------------- ----------------
33,795,993 6,991,277 15,904,070
-------------- ---------------- ----------------
Contributions and deferrals:
Employee deferrals 25,644,135 25,890,394 26,966,573
Employer contributions 8,170,829 8,335,813 9,262,714
Other additions, net (Note H) 118,713 5,058 -
-------------- ---------------- ----------------
33,933,677 34,231,265 36,229,287
-------------- ---------------- ----------------
Total additions 67,729,670 41,222,542 52,133,357
-------------- ---------------- ----------------
Deductions from net assets attributable to:
Benefits to and withdrawals by participants 21,943,134 16,033,076 9,159,020
Administrative expenses 117,145 117,292 193,265
Other deductions, net (Note H) 2,936,878 1,784,260 273,041
-------------- ---------------- ----------------
Total deductions 24,997,157 17,934,628 9,625,326
-------------- ---------------- ----------------
Increase in net assets 42,732,513 23,287,914 42,508,031
-------------- ---------------- ----------------
Net assets, beginning of year 213,506,276 190,218,362 147,710,331
-------------- ---------------- ----------------
Net assets, end of year $256,238,789 $213,506,276 $190,218,362
============== ================ ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
5
RAYTHEON SAVINGS AND INVESTMENT PLAN
FOR SPECIFIED HOURLY PAYROLL EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
A. Description of Plan:
-------------------
General
The following description of the Raytheon Savings and Investment Plan
for Specified Hourly Payroll Employees (the "Plan") provides only
general information. Participants should refer to the Plan agreement
for a complete description of the Plan's provisions. The Plan is a
defined contribution plan covering certain hourly payroll employees of
Raytheon Company (the "Company") who are members of specified labor
unions. To participate in the Plan, eligible employees must have three
months of service and may enter the Plan only on the first day of each
month. The purpose of the Plan is to provide participants with a tax-
effective means of meeting both short and long-term investment
objectives. The Plan is intended to be a "qualified cash or deferred
arrangement" under Sections 401(a) and 401(k) of the Internal Revenue
Code (the "Code"). The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA). The total
number of participants in the Plan as of December 31, 1995 and 1994
were 14,090 and 12,160, respectively. Participants by fund were as
follows as of December 31, 1995:
Guaranteed Income Fund 9,563
Equity Fund 4,420
Raytheon Common Stock Fund 5,004
Stock Index Fund 2,914
Balanced Fund 1,284
Effective July 31, 1992, the Plan's investments were combined with the
investments of other similar defined contribution plans of Raytheon
Company and Subsidiaries Consolidated 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.
Contributions and Deferrals
Eligible employees were allowed to defer to the Plan up to 17% of
their salaries effective January 1, 1994. The Company contributes
amounts equal to 50% of each participant's deferral, up to a maximum
of 3% of the participant's salary. As of December 31, 1995, the annual
employee deferral for a participant cannot exceed $9,240. Rollover
contributions from other qualified plans are accepted by the Plan.
Participants may invest their deferrals in increments of 1% in any
combination of five funds: (a) a Guaranteed Income Fund under which
assets are invested primarily in contracts providing for fixed rates
of interest for specified periods of time, (b) an Equity Fund which
invests in shares of a mutual fund which consists primarily of
income-producing equity securities, (c) a Raytheon Common Stock Fund
which invests in shares of Raytheon Company 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 and (e)
<PAGE>
6
RAYTHEON SAVINGS AND INVESTMENT PLAN
FOR SPECIFIED HOURLY PAYROLL EMPLOYEES
NOTES TO FINANCIAL STATEMENTS, CONTINUED
a Balanced Fund which invests in shares of a mutual fund which
consists primarily of equity securities, bonds and money market
instruments. Dividends and distributions from investments of the
Raytheon Common Stock Fund, the Equity Fund and the Balanced 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 occurs
upon completion of a certain period of service 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.
Benefits and Withdrawals
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 to January of the
following year.
Loans to Participants
A participant may borrow against a portion of the balance in the
participant's account, subject to certain restrictions. The maximum
amount of a loan is the lesser of one-half (1/2) 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.
<PAGE>
7
RAYTHEON SAVINGS AND INVESTMENT PLAN
FOR SPECIFIED HOURLY PAYROLL EMPLOYEES
NOTES TO FINANCIAL STATEMENTS, CONTINUED
Administrative Expenses
Substantially all expenses of administering the Plan are paid by the Plan
participants.
B. Summary of Significant Accounting Policies:
------------------------------------------
The Plan's investment contracts are valued at their contract value, defined
as net contributions and deferrals plus interest earned on the underlying
investments at contracted rates, which 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.
Security transactions are recorded on trade date. Except for its investment
contracts (Note E), the Plan's investments are held by bank-administered
trust funds. Payables for outstanding security transactions represent trades
which have occurred but have not yet settled.
The Plan presents in the statement of changes in net assets the net
appreciation (depreciation) in the fair value of its investments which
consists of the realized gains or losses and the unrealized appreciation
(depreciation) on those investments.
Dividend income is recorded on the ex-dividend date. Income from other
investments is recorded as earned on an accrual basis.
Benefits are recorded when paid.
Certain items in the 1994 financial statements have been reclassified to
conform to the 1995 presentation.
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities as of December 31, 1995
and 1994, as well as the reported amounts or revenues and expenses during
the three years ended December 31, 1995. Actual results could differ from
the estimates included in the financial statements.
C. Federal Income Tax Status:
-------------------------
The Plan obtained its latest determination letter in June 1995 in which the
Internal Revenue Service stated that the Plan, as submitted, was in
compliance with the applicable requirements of the Internal Revenue Code.
The Plan has been amended since receiving the determination letter.
<PAGE>
8
RAYTHEON SAVINGS AND INVESTMENT PLAN
FOR SPECIFIED HOURLY PAYROLL EMPLOYEES
NOTES TO FINANCIAL STATEMENTS, CONTINUED
However, the Plan administrator and the Plan's legal counsel believe that
the Plan is currently designed and being operated in compliance with the
applicable requirements of the Internal Revenue Code. Therefore, no
provision for income taxes has been included in the Plan's financial
statements.
D. Plan Termination:
----------------
Although it has not expressed any intention to do so, the Company reserves
the right under the Plan at any time or times to discontinue its
contributions and to terminate the Plan subject to the provisions of ERISA.
In the event of Plan termination, after payment of all expenses and
proportional adjustment of accounts to reflect such expenses, fund losses or
profits, and reallocations, the participant will become 100% vested in their
account balances, including Company contributions.
E. Investment Contracts:
The Plan holds three collateralized fixed income investment portfolios (with
no expiration date), two of which are managed by insurance companies and one
of which is managed by an investment management firm. The credited interest
rates are adjusted semiannually to reflect the experienced and anticipated
yields to be earned on such investments, based on their book value. The
average yield and credited interest rates were as follows:
Average Credited
Yield Interest Rate
------- -------------
For year ended 12/31/95
Bankers Trust 6.67% 6.84%
Metropolitan Life Insurance Company 6.46% 6.61%
Prudential Asset Management Company 6.88% 6.86%
For the year ended 12/31/94
Bankers Trust 6.19% 6.37%
Metropolitan Life Insurance Company 6.26% 6.22%
Prudential Asset Management Company 6.91% 6.89%
The contract values are subject to limitations in certain situations
including large work force reductions and Plan termination.
<PAGE>
9
RAYTHEON SAVINGS AND INVESTMENT PLAN
FOR SPECIFIED HOURLY PAYROLL EMPLOYEES
NOTES TO FINANCIAL STATEMENTS, CONTINUED
F. Related Party Transactions:
--------------------------
In accordance with the provisions of the Plan, Fidelity Management Trust
Company (the "Trustee") acts as the Plan's agent for purchases and sales
of shares of Raytheon Company Common Stock. For the years ended December
31, 1995, 1994 and 1993, purchases of Raytheon Company Common Stock
amounted to $7,328,880, $2,411,818 and $3,468,690, respectively. Sales
of Raytheon Company Common Stock amounted to $899,683, $605,934 and
$701,287 in 1995, 1994 and 1993, respectively.
G. Plant Transfers:
---------------
Effective February 23, 1995, the accounts of certain employees of
Amana Refrigeration, Inc. who participated in the Raytheon Employee
Savings and Investment Plan were transferred into the Plan.
H. Other Additions and Deductions:
------------------------------
Other additions and deductions include transfers of participant accounts
between the Raytheon Savings and Investment Plan for Specified Hourly
Payroll Employees and the Raytheon Savings and Investment Plan, the
Raytheon Employee Savings and Investment Plan and the Raytheon Savings
and Investment plan for Puerto Rico Based Employees for those
participants who changed plans during the year.
<PAGE>
11
I. Fund Data:
<TABLE>
<CAPTION>
The following is a summary of net assets available for plan benefits by
fund as of December 31:
1995
--------------------------------------------------------------------------------------
Guaranteed Raytheon Stock
income Equity Common Index Balanced Loan
Fund Fund Stock Fund Fund Fund Fund Total
--------- ------ ---------- ----- -------- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments, at contract value:
Bankers Trust $47,043,347 $47,043,347
Prudential Life Insurance Company
of America 30,115,204 30,115,204
Metropolitan Life Insurance Company 47,122,417 47,122,417
Investments, at fair value:
Fidelity Equity Income Fund
(919,629 shares) $34,881,511 34,881,511
Raytheon Company Common Stock (975,114
shares) $46,074,144 46,074,144
BT Pyramid Equity Index Fund (13,275
shares) $18,333,552 18,333,552
Fidelity Balanced Fund (451,051 shares) $6,098,210 6,098,210
Loans receivable from participants $24,013,369 24,013,369
----------- ----------- ----------- ----------- ---------- ----------- -----------
Total investments 124,280,968 34,881,511 46,074,144 18,333,552 6,098,210 24,013,369 253,681,754
Receivables:
Accrued Investment income 2,343 902 3,245
Employee deferrals 274,757 67,970 72,402 45,751 17,178 478,058
Employer contributions 98,350 22,859 34,437 14,122 5,394 175,162
Cash and cash equivalents 1,424,498 - 371,859 184,641 - - 1,980,998
----------- ----------- ----------- ----------- ---------- ----------- -----------
Total assets 126,078,573 34,972,340 46,555,185 18,578,968 6,120,782 24,013,369 256,319,217
Liabilities:
Forfeitures 73,581 - - - - - 73,581
Accrued expenses - - - 6,847 - - 6,847
----------- ----------- ----------- ----------- ---------- ----------- -----------
Total liabilities 73,581 - - 6,847 - - 80,428
----------- ----------- ----------- ----------- ---------- ----------- ------------
Net assets available for plan benefits $126,004,992 $34,972,340 $46,555,185 $18,572,121 $6,120,782 $24,013,369 $256,238,789
============ =========== =========== =========== ========== =========== ============
</TABLE>
<PAGE>
12
I. Fund Data:
<TABLE>
<CAPTION>
The following is a summary of net assets available for plan benefits by
fund as of December 31:
1994
--------------------------------------------------------------------------------------
Guaranteed Raytheon Stock
income Equity Common Index Balanced Loan
Fund Fund Stock Fund Fund Fund Fund Total
--------- ------ ---------- ----- -------- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments, at contract value:
Bankers Trust $47,522,639 $47,522,639
Prudential Life Insurance Company
of America 30,609,465 30,609,465
Metropolitan Life Insurance Company 47,305,558 47,305,558
Investments, at fair value:
Fidelity Equity Income Fund
(823,958 shares) $25,295,510 25,295,510
Raytheon Company Common Stock (332,579
shares) $21,243,461 21,243,461
BT Pyramid Equity Index Fund (9,934
shares) $ 9,957,963 9,957,963
Fidelity Balanced Fund (518,952 shares) $6,377,914 6,377,914
Loans receivable from participants $22,495,708 22,495,708
----------- ----------- ----------- ----------- ---------- ----------- -----------
Total investments 125,437,662 25,295,510 21,243,461 9,957,963 6,377,914 22,495,708 210,808,218
Receivables:
Accrued Investment income 1,206 512 - - 1,718
Employee deferrals 179,078 35,799 30,593 37,894 15,455 - 298,819
Employer contributions 59,570 10,807 8,673 5,317 4,158 - 88,525
Cash and cash equivalents 2,062,868 - 278,568 108,453 - - 2,449,889
----------- ----------- ----------- ----------- ---------- ----------- -----------
Total assets 127,739,178 25,342,116 21,562,501 10,110,139 6,397,527 22,495,708 213,647,169
=========== =========== ========== =========== ========== =========== ===========
Liabilities:
Payable for oustanding purchases - - 51,546 - - - 51,546
Administrative expenses 18,341 3,639 3,199 1,721 918 - 27,818
Forfeitures 61,529 - - - - - 61,529
----------- ----------- ----------- ----------- ---------- ----------- -----------
Total liabilities 79,870 3,639 54,745 1,721 918 - 140,893
----------- ----------- ----------- ----------- ---------- ----------- ------------
Net assets available for plan benefits $127,659,308 $25,338,477 $21,507,756 $10,108,418 $6,396,609 $22,495,708 $213,506,276
============ =========== =========== =========== ========== =========== ============
</TABLE>
<PAGE>
13
<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:
1995
-------------------------------------------------------------------------------------------------
Guaranteed Raytheon Stock
Income Equity Common Index Balanced Loan
Fund Fund Stock Fund Fund Fund Fund Total
-------------- --------- ------------ ----- -------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributable to:
Investment income:
Change in net appreciation
(depreciation) of
investments $ 6,073,021 $11,731,578 $ 4,211,631 $ 565,401 $ 22,581,631
Interest $ 8,274,476 - 28,746 10,786 - 8,314,008
Dividends - 813,398 635,561 - 265,216 1,714,175
Capital gains distributions - 1,186,179 - - - 1,186,179
-------------- ------------ ----------- ----------- --------- -------------
8,274,476 8,072,598 12,395,885 4,222,417 830,617 33,795,993
-------------- ------------ ----------- ----------- --------- -------------
Contributions and deferrals:
Employee deferrals 15,186,071 3,464,962 3,723,011 2,139,786 1,130,305 25,644,135
Employer contributions 5,034,119 1,040,534 1,134,819 633,986 327,371 8,170,829
Other additions, net 57,799 21,719 21,841 7,820 9,534 118,713
-------------- ------------ ----------- ----------- --------- -----------
20,277,989 4,527,215 4,879,671 2,781,592 1,467,210 33,933,677
-------------- ------------ ----------- ----------- --------- -----------
Total additions 28,552,465 12,599,813 17,275,556 7,004,009 2,297,827 67,729,670
-------------- ------------ ----------- ----------- --------- -----------
Deductions from net assets attributable to:
Benefits to and withdrawals by
participants 16,296,564 2,258,952 2,269,921 728,665 389,032 21,943,134
Other deductions, net 514,855 177,908 164,254 119,885 35,933 $ 1,924,043 2,936,878
Administrative expenses 67,236 14,995 24,121 7,624 3,169 - 117,145
-------------- ------------ ----------- ----------- --------- ----------- -----------
Total deductions 16,878,655 2,451,855 2,458,296 856,174 428,134 1,924,043 24,997,157
-------------- ------------ ----------- ----------- ---------- ----------- ------------
Interfund transfers (13,328,126) (514,095) 10,230,169 2,315,868 (2,145,520) 3,441,704 -
------------ ------------ ----------- ----------- ---------- ----------- ------------
Increase in net assets (1,654,316) 9,633,863 25,047,429 8,463,703 (275,827) 1,517,661 42,732,513
Net assets, beginning of year 127,659,308 25,338,477 21,507,756 10,108,418 6,396,609 22,495,708 213,506,276
------------ ------------ ----------- ----------- ---------- ----------- ------------
Net assets, end of year $126,004,992 $34,972,340 $46,555,185 $18,572,121 $6,120,782 $24,013,369 $256,238,789
------------ ------------ ----------- ----------- ---------- ----------- ------------
</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:
1994
---------------------------------------------------------------------------------------------------
Guaranteed Raytheon Stock
Income Equity Common Index Balanced Loan
Fund Fund Stock Fund Fund Fund Fund Total
----------- ----------- ---------- ----------- --------- ---- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributable to:
Investment income:
Change in net appreciation
(depreciation) of
investments $(2,343,460) $ (646,461) $ 136,803 $(588,455) $ (3,441,573)
Interest $ 7,395,467 - 9,484 3,681 - 7,408,632
Dividends - 729,374 456,166 - 207,138 1,392,678
Capital gains distributions - 1,631,540 - - - 1,631,540
----------- ----------- ---------- ----------- --------- --------------
7,395,467 17,454 (180,811) 140,484 (381,317) 6,991,277
----------- ----------- ---------- ----------- --------- --------------
Contributions and deferrals:
Employee deferrals 16,032,713 3,470,698 2,940,576 1,897,320 1,549,087 25,890,394
Employer contributions 5,364,007 1,056,998 927,180 567,354 420,274 8,335,813
Other additions, net - - - - 5,058 5,058
----------- ----------- ---------- ----------- --------- --------------
21,396,720 4,527,696 3,867,756 2,464,674 1,974,419 34,231,265
----------- ----------- ---------- ----------- --------- --------------
Total additions 28,792,187 4,545,150 3,686,945 2,605,158 1,593,102 41,222,542
----------- ----------- ---------- ----------- --------- --------------
Deductions from net assets
attributable to:
Benefits to and withdrawals by
participants 11,869,555 1,508,782 1,765,481 586,126 303,132 16,033,076
Other deductions, net 21,737 9,482 26,965 3,653 - $1,722,423 1,784,260
Administrative expenses 81,603 15,058 10,236 5,974 4,421 - 117,292
----------- ----------- ---------- ----------- --------- ---------- --------------
Total deductions 11,972,895 1,533,322 1,802,682 595,753 307,553 1,722,423 17,934,628
----------- ----------- ---------- ----------- --------- ---------- --------------
Interfund transfers (5,679,044) 49,548 1,120,542 (593,306) 250,967 4,851,293 -
----------- ----------- ---------- ----------- --------- ---------- --------------
Increase in net assets 11,140,248 3,061,376 3,004,805 1,416,099 1,536,516 3,128,870 23,287,914
Net assets, beginning of year 116,519,060 22,277,101 18,502,951 8,692,319 4,860,093 19,366,838 190,218,362
----------- ----------- ---------- ----------- --------- ---------- --------------
Net assets, end of year $127,659,308 $25,338,477 $21,507,756 $10,108,418 $6,396,609 $22,495,708 $213,506,276
----------- ----------- ---------- ----------- --------- ---------- --------------
</TABLE>
Continued
<PAGE>
15
<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:
1993
------------------------------------------------------------------------------------------
Guaranteed Raytheon Stock
Income Equity Common Index Balanced Loan
Fund Fund Stock Fund Fund Fund Fund Total
---------- -------- ---------- ------- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributable to:
Investment income:
Change in net appreciation
(depreciation) of
investments - $ 2,772,150 $ 3,747,423 $ 710,579 $ 52,625 $ 7,282,777
Interest $ 7,371,272 - 5,455 2,539 - 7,379,266
Dividends - 689,705 192,719 - 122,883 1,005,307
Capital gains distributions - 76,695 - - 160,025 236,720
----------- ----------- ----------- ---------- --------- ------------
7,371,272 3,538,550 3,945,597 713,118 335,533 15,904,070
----------- ----------- ----------- ---------- --------- ------------
Contributions and deferrals:
Employee deferrals 18,741,136 3,180,274 2,276,155 2,018,935 750,073 26,966,573
Employer contributions 6,607,442 1,039,483 785,680 621,048 209,061 9,262,714
----------- ----------- ----------- ---------- --------- ------------
25,348,578 4,219,757 3,061,835 2,639,983 959,134 36,229,287
----------- ----------- ----------- ---------- --------- ------------
Total additions 32,719,850 7,758,307 7,007,432 3,353,101 1,294,667 52,133,357
----------- ----------- ----------- ---------- --------- ------------
Deductions from net assets attributable to:
Benefits to and withdrawals
by participants 7,091,667 830,158 882,203 290,231 64,761 9,159,020
Other deductions, net 169,114 32,744 52,368 18,523 292 273,041
Administrative expenses 137,540 23,380 18,966 9,416 3,963 193,265
----------- ----------- ----------- ---------- --------- ------------
Total deductions 7,398,321 886,282 953,537 318,170 69,016 9,625,326
----------- ----------- ----------- ---------- --------- ------------
Interfund transfers (9,310,015) 148,941 261,420 (630,442) 3,634,442 $ 5,895,654 -
----------- ----------- ----------- ---------- --------- ----------- ------------
Increase in net assets 16,011,514 7,020,966 6,315,315 2,404,489 4,860,093 5,895,654 42,508,031
Net assets, beginning of year 100,507,546 15,256,135 12,187,636 6,287,830 - 13,471,184 147,710,331
----------- ----------- ----------- ---------- --------- ----------- ------------
Net assets, end of year $116,519,060 $22,277,101 $18,502,951 $8,692,319 $4,860,093 $19,366,838 $190,218,362
------------ ----------- ----------- ---------- --------- ----------- ------------
</TABLE>
<PAGE>
16
J. Master Trust:
As of December 31, 1995 and 1994, all plan investments are included under the
Master Trust. At December 31, 1995, assets of the Plan represented 10.4% of the
total assets under the Master Trust. This was down from 10.7% at December 31,
1994. The following is a summary of net assets available for plan benefits by
fund under the Master Trust as of December 31:
<TABLE>
<CAPTION>
1995
----------------------------------------------------------------
Guaranteed Raytheon Stock
Income Equity Common Index Balanced
Fund Fund Stock Fund Fund Fund
---------- ------ ---------- ---- --------
<S> <C> <C> <C> <C> <C>
Assets:
Investments, at contract value:
Bankers Trust $ 355,570,494
Prudential Insurance Company of America 227,621,525
Metropolitan Life Insurance Company 356,168,133
Investments, at fair value:
Fidelity Equity Income Fund (12,407,312 shares) $ 470,609,321
Raytheon Company Common Stock (12,011,039 shares) $ 567,521,593
BT Pyramid Equity Index Fund (162,981 shares) $ 225,079,988
Fidelity Balanced Fund (7,645,074 shares) $ 103,361,407
Loans receivable from participants
------------- ------------- ------------- ------------- -------------
Total investments 939,360,152 470,609,321 567,521,593 225,079,988 103,361,407
Receivables:
Accrued investment income 28,854 11,081
Cash and cash equivalents 10,766,863 4,580,403 2,266,827
------------- ------------- ------------- ------------- ------------
Total assets 950,127,015 470,609,321 572,130,850 227,357,896 103,361,407
Liabilities:
Total liabilities - - - - -
------------- ------------- ------------- ------------- ------------
Net assets available for plan benefits $ 950,127,015 $ 470,609,321 $ 572,130,850 $ 227,357,896 $ 103,361,407
============== ============= ============= ============= =============
Percentage of plan assets included under
the Master Trust 13.2% 7.4% 8.1% 8.2% 5.9%
<CAPTION>
Loan
Fund Total
---- -----
<S> <C> <C>
Assets:
Investments, at contract value:
Bankers Trust $ 355,570,494
Prudential Insurance Company of America 227,621,525
Metropolitan Life Insurance Company 356,168,133
Investments, at fair value:
Fidelity Equity Income Fund (12,407,312 shares) 470,609,321
Raytheon Company Common Stock (12,011,039 shares) 567,521,593
BT Pyramid Equity Index Fund (162,981 shares) 225,079,988
Fidelity Balanced Fund (7,645,074 shares) 103,361,407
Loans receivable from participants $ 130,012,819 130,012,819
------------- --------------
Total investments 130,012,819 2,435,945,280
Receivables:
Accrued investment income 39,935
Cash and cash equivalents 17,614,093
------------- --------------
Total assets 130,012,819 2,453,599,308
Liabilities:
Total liabilities - -
------------- --------------
Net assets available for plan benefits $ 130,012,819 $ 2,453,599,308
============= ===============
Percentage of plan assets included under
the Master Trust 18.5% 10.4%
</TABLE>
<PAGE>
17
J. Master Trust, Continued:
------------------------
<TABLE>
<CAPTION>
The following is a summary of net assets available for plan benefits by
fund under the Master Trust as of December 31:
1994
-------------------------------------------------------------------------------------------------
Guaranteed Raytheon Stock
Income Equity Common Index Balanced Loan
Fund Fund Stock Fund Fund Fund Fund Total
-------------- ----------- ------------ ----- -------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments, at contract value:
Bankers Trust $ 363,462,005 363,462,005
Prudential Insurance
Company of America 234,106,898 234,106,898
Metropolitan Life Insurance
Company 361,801,731 361,801,731
Investments, at fair value:
Fidelity Equity Income Fund
(10,843,663 shares) - $332,900,446 332,900,446
Raytheon Company Common Stock
(5,052,810 shares) - - $322,748,238 322,748,238
BT Pyramid Equity Index Fund
(123,405 shares) - - - $123,699,986 123,699,986
Fidelity Balanced Fund
(8,610,351 shares) - - - - $105,826,958 105,826,958
Loans receivable from
participants - $123,811,382 123,811,382
-------------- ------------ ------------ ----------- ----------- ------------- -------------
Total Investments 959,370,634 332,900,446 322,748,238 123,699,986 105,826,958 123,811,382 1,968,357,644
Receivables:
Accrued investment income 18,327 6,363 - 24,690
Cash and cash equivalents 15,777,199 - 4,232,020 1,347,221 - - 21,356,440
-------------- ------------ ----------- ----------- ------------ ------------ -------------
Total assets 975,147,833 332,900,446 326,998,585 125,053,570 105,826,958 123,811,382 1,989,738,774
Liabilities:
Payable for outstanding
purchases - - 783,126 - - - 783,126
-------------- ------------ ----------- ----------- ------------ ------------ -------------
Total liabilities - - 783,126 - - - 783,126
-------------- ------------ ----------- ----------- ------------ ------------ -------------
Net assets available for
plan benefits $ 975,147,833 $332,900,446 $326,215,459 $125,053,570 $105,826,958 $123,811,382 $1,988,955,648
============== ============ ============= ============ ============ ============ ==============
Percentage of plan assets included
under the Master Trust 13.1% 7.6% 6.6% 8.1% 6.0% 18.2% 10.7%
</TABLE>
<PAGE>
18
J. Master Trust, Continued:
-----------------------
The following is a summary of the changes in net assets by fund under the
Master Trust as of December 31:
<TABLE>
Guaranteed Raytheon
Income Equity Common
Fund Fund Stock Fund
------------ ---------- --------------
<S> <C> <C> <C>
1995:
Investment income:
Change in appreciation (depreciation) of
investments $ 73,248,498 $ 148,529,866
Interest $ 63,061,904 - 330,559
Dividends - 11,010,111 7,828,571
Capital gains distributions - 39,117,479 -
------------- ------------- -------------
Total investment income $ 63,061,904 $ 123,376,088 $ 156,688,996
============= ============= =============
1994:
Investment income:
Change in appreciation (depreciation)
of investments - (34,214,567) (17,318,026)
Interest 57,046,896 - 143,416
Dividends - 9,504,997 6,930,447
Capital gains distributions - 21,354,374 -
------------- ------------- -------------
Total investment income $ 57,046,896 $ (3,355,196) $ (10,244,163)
============= ============= =============
Stock
Index Balanced
Fund Fund Total
------------- -------------- ------------
1995:
Investment income:
Change in appreciation (depreciation) of
investments $ 45,735,616 $ 10,504,382 $ 278,018,362
Interest 152,395 - 63,544,858
Dividends 4,503,326 23,342,008
Capital gains distributions - - 39,117,479
------------- ------------ -------------
Total investment income $ 45,888,011 $ 15,007,708 $ 404,022,707
============= ============= =============
1994:
Investment income:
Change in appreciation (depreciation)
of investments (461,152) (7,961,156) (59,954,901)
Interest 45,820 - 57,236,132
Dividends - 3,364,162 19,799,606
Capital gains distributions - - 21,354,374
-------------- -------------- --------------
Total investment income $ (415,332) $ (4,596,994) $ 38,435,211
=============== ============== ==============
</TABLE>
<PAGE> 1
EXHIBIT (99.2a)
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Raytheon Company:
We consent to the incorporation by reference in the Registration Statements of
Raytheon Company on Form S-8 (File No. 33-5650, No. 33-10811, No. 33-15398, No.
33-21741, No. 33-24695 and No. 33-49043) of our report dated May 31, 1996 on our
audits of the financial statements of the Raytheon Savings and Investment Plan
for Specified Hourly Payroll Employees as of December 31, 1995 and 1994 and for
each of the three years in the period ended December 31, 1995, which report is
included in this annual report on Form 11-K. We also consent to the reference to
our firm under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
June 26, 1996
<PAGE> 1
EXHIBIT (99.2b)
RAYTHEON SAVINGS AND INVESTMENT PLAN
FOR SPECIFIED HOURLY PAYROLL EMPLOYEES
Provisions in Effect as of January 1, 1996
ARTICLE I - PREAMBLE
The Raytheon Savings and Investment Plan for Specified Hourly Payroll
Employees, which became effective on June 30, 1986, provides employees with a
tax-effective means of allocating a portion of their salary to be invested in
one or more investment opportunities specified in the Plan as determined by the
employee and set aside for short-term and long-term needs of the employee. The
Plan is applicable only to eligible employees who meet the requirements for
participation on or after June 30, 1986.
It is intended that the Plan will comply with all of the requirements
for a qualified profit sharing plan under Sections 401(a) and 401(k) of the
Internal Revenue Code and will be amended from time to time to maintain
compliance with these requirements. The terms used in the Plan have the meanings
specified in Article XIV unless the context indicates otherwise.
The Plan is intended to constitute a plan described in Section 404(c)
of the Employee Retirement Income Security Act and Title 29 of the Code of
Federal Regulations, Section 2550.404(c)-1. Participants in the Plan are
responsible for selecting their own investment opportunities from the options
available under the Plan and the Plan fiduciaries are relieved of any liability
for any losses which are a direct and necessary result of investment
instructions given by a participant or beneficiary.
The Plan as restated herein shall be effective as of July 1, 1994 or
such other dates as may be specifically provided herein. The rights of former
Employees whose Severance from Service Date occurred prior to the date of any
amendment shall be governed by the terms of the Plan in effect on their
Severance from Service Date except as otherwise provided herein.
ARTICLE II - ELIGIBILITY
2.1 Eligibility Requirements -- Each Eligible Employee may join the
Plan as of the first Entry Date coincident with or next following completion of
a Period of Service of three (3) consecutive months commencing on the Employee's
Commencement Date or Reemployment Commencement date, whichever is applicable, or
any subsequent Entry Date selected by the Eligible Employee provided he or she
continues in the same Period of Service or meets the requirements under Section
2.2.
<PAGE>
2
2.2 Procedure for Joining the Plan -- Each Eligible Employee who meets
the requirements of Section 2.1 may join the Plan by communicating with Fidelity
in accordance with instructions in an enrollment kit which will be made
available to each Eligible Employee. An enrollment in the Plan shall not be
deemed to have been completed until the Employee has designated: a percentage by
which Participants' Eligible Compensation shall be reduced as an Elective
Deferral in accordance with the requirements of Section 3.2, subject to the
nondiscrimination test described in Section 3.3; election of investment funds as
described in Article IV; one or more Beneficiaries; and such other information
as specified by Fidelity. Enrollment will be effective as of the first
administratively feasible Pay Period following completion of enrollment. The
Administrator in its discretion may from time to time make exceptions and
adjustments in the foregoing procedure on a uniform and nondiscriminatory basis.
2.3 Transfer to Position Not Covered by Plan -- If a Participant is
transferred to another position with the Employer in which the Participant is no
longer an Eligible Employee, the Participant will remain a Participant of the
Plan with respect to Elective Deferrals previously made but will no longer be
eligible to have Elective Deferrals made to the Plan on his or her behalf until
he or she again becomes an Eligible Employee. In the event the Participant is
subsequently transferred to a position in which he or she again becomes an
Eligible Employee, the Participant may renew Elective Deferrals by communicating
with Fidelity and providing all of the information requested by Fidelity. The
renewal of Elective Deferrals will be effective as of the first administratively
feasible Pay Period following receipt by Fidelity of the requested information.
ARTICLE III - CONTRIBUTIONS
3.1 Employer Contributions -- The Companies shall contribute to the
Trust established under this Plan from Net Annual Profits or Net Profits an
amount equal to the total amount of Elective Deferrals agreed to be made by the
Companies pursuant to designation by Participants.
<PAGE>
3
3.2 Elective Deferrals -- Elective Deferrals must be made in one
percent (1%) increments with a minimum Elective Deferral of one percent (1%) of
Eligible Compensation and a maximum Elective Deferral of seventeen percent
(17%); provided, however, that effective for any Plan Year beginning on or after
January 1, 1987, in no event may the amount of Elective Deferrals to the Plan,
when taken into account with all other elective deferral (as defined in Code
Section 402(g)) made by a Participant under any other plan maintained by the
Employer, exceed $7,000 (adjusted for increases in the cost of living under Code
Section 402(g)) in any calendar year. If a Participant participates in another
plan or arrangement which is not maintained by the Employer and which permits
elective deferrals in any calendar year and his total Elective Deferrals under
the Plan and other plan(s) exceed $7,000 (as adjusted) in a calendar year, he
may request to receive a distribution of the amount of the excess deferral (a
deferral in excess of $7,000 (as adjusted)) that is attributable to Elective
Deferrals to this Plan together with earnings thereon, notwithstanding any
limitations on distributions contained in the Plan. Such distribution shall be
made by the April 15 following the Plan Year in which the Elective Deferrals
were made, provided that the Participant notifies the Administrator of the
amount of the excess deferral that is attributable to Elective Deferrals to the
Plan and requests such a distribution. The Participant's notice must be received
by the Administrator no later than the March 1 following the Plan Year of the
excess deferral. In the absence of such notice, the amount of such excess
deferral attributable to Elective Deferrals to this Plan shall be subject to all
limitations on withdrawals and distributions in the Plan. In addition to
distributing excess deferrals at the request of the Participant, the
Administrator shall distribute any deferrals made under this Plan or any other
plan of the Employer in excess of the statutory maximum deferral of $7,000 (as
adjusted). For this purpose as provided in 26 CFR Section 1.402(g)-1(e)(2), a
Participant is deemed to notify the Administrator of any excess deferrals that
arise by taking into account only those Elective Deferrals made to this Plan and
any other plans of this Employer and to request that such excess deferrals be
distributed by the Plan Administrator. The distribution of excess deferrals will
include any earnings or be reduced by any loss allocable to the excess deferrals
pursuant to the Plan method of allocating earnings or losses and calculated to
the last day of the Plan Year in which the excess deferrals were made.
The Administrator may establish prospectively lower limits for Higher
Paid Participants for the purpose of complying with Internal Revenue Code
requirements in an orderly manner.
3.3 Limitations on Elective Deferrals --
(a) In no event may Elective Deferrals made on behalf of all
Higher Paid Eligible Employees with respect to any Plan Year result in an Actual
Deferral Percentage for such group of Higher Paid Eligible Employees which
exceeds the greater of (i) or (ii) where:
(i) is an amount equal to 125 percent of the Actual Deferral Percentage
for all Non-Higher Paid Eligible Employees who have satisfied the eligibility
requirements of Article II with respect to such Plan Year; and
(ii) is an amount equal to the Actual Deferral Percentage for all
Non-Higher Paid Eligible Employees who have satisfied the eligibility
requirements of Article II with respect to such Plan Year and two percent (2%),
provided that such amount does not exceed 200 percent of such Actual Deferral
Percentage.
<PAGE>
4
(b) The Administrator shall be authorized to implement rules
authorizing or requiring reductions in Elective Deferrals that may be made by
Higher Paid Eligible Employees during the Plan Year (prior to any contributions
to the Trust) so that the limitation of Section 3.3(a) is satisfied.
(c) The Company may in its discretion make Qualified
Nonelective Contributions to the Accounts of certain Non-Higher Paid Eligible
Employees to the extent required to satisfy the limitations of Section 3.3(a).
(d) If the limitation under Section 3.3(a) is exceeded in any
Plan Year, the Excess Amounts made on behalf of Higher Paid Eligible Employees
with respect to a Plan Year (and earnings allocable thereto) shall then be
distributed to such Employees as soon as practicable after the end of such Plan
Year, but no later than the last day of the immediately following Plan Year. The
Excess Amounts distributed shall include Elective Deferrals and the income
allocable thereto. The amount of income allocable to Excess Amounts shall be
determined in accordance with the regulations issued under Section 401(k) of the
Code and shall include income for the Plan Year for which the Excess Amounts
were made. Any such distributions shall be reduced by the amount of any
distributions made pursuant to Section 3.2 above.
(e) The Administrator may utilize any combination of the
methods described in Sections 3.3(b), (c) and (d) to assure that the limitations
of Section 3.3(a) are satisfied.
(f) For purposes of this Section 3.3, the following
definitions and special rules shall apply:
(i) The term "Annual Earnings" means the Employee's wages which are
required to be reported on IRS Form W-2 for the calendar year which coincides
with the Plan Year.
(ii) The term "Actual Deferral Percentage" shall mean, with respect to
any group of actively employed Eligible Employees who have satisfied the
eligibility requirements of Article II for a Plan Year, the average of the
ratios, calculated separately for each such Eligible Employee in the group, of:
(A) The amount of Elective Deferrals paid to the Trust Fund for
such Plan Year, divided by
(B) The Eligible Employee's Annual Earnings, including any Elective
Deferrals made by the Companies to the Plan on behalf of the Eligible Employee
and any pre-tax elective contributions made by the Companies which are
excludible from the Eligible Employee's income under Section 125 of the Code.
Elective Deferrals shall be taken into account for a Plan Year only if such
amounts are allocated to the Eligible Employee's Account as of a date within
that Plan Year. For this purpose, an Elective Deferral is considered allocated
as of a date within a Plan Year if the allocation is not contingent on
participation or performance of services after such date and the Elective
Deferral is actually paid to the Trust Fund no later than 12 months after the
Plan Year to which the contribution relates.
<PAGE>
5
(iii) The term "Excess Amounts" shall mean with respect to each Higher
Paid Eligible Employee who has satisfied the eligibility requirements of Article
II for a Plan Year, the amount equal to total Elective Deferrals made on behalf
of such Employee (determined prior to the application of the leveling procedure
described below) minus the product of the Employee's Actual Deferral Percentage
(determined after the leveling procedure described below) multiplied by the
amount specified in Section 3.3(f)(ii)(B) above. In accordance with the
regulations issued under Section 401(k) of the Code, Excess Amounts shall be
determined by a leveling procedure under which the Actual Deferral Percentage of
the Higher Paid Eligible Employee with the highest such percentage shall be
reduced to the extent required to enable the limitation of Section 3.3(a) to be
satisfied or, if it results in a lower reduction, to the extent required to
cause such Higher Paid Eligible Employee's Actual Deferral Percentage to equal
the Actual Deferral Percentage of the Higher Paid Eligible Employee with the
next highest Actual Deferral Percentage. This leveling procedure shall be
repeated until the limitation of Section 3.3(a) is satisfied.
(iv) The term "Qualified Nonelective Contributions" means contributions
that are made pursuant to Sections 3.3(c) or 3.8(c), meet the requirements of
Section 401(m)(4)(C) of the Code and the regulations issued thereunder, and
which are designated as a Qualified Nonelective Contribution for purposes of
satisfying the limitations of Sections 3.3(c) or 3.8(c). Qualified Nonelective
Contributions shall be nonforfeitable when made and are distributable only in
accordance with the distribution and withdrawal provisions that are applicable
to Elective Deferrals under the Plan; provided, however, that Qualified
Nonelective Contributions may not be withdrawn on account of financial hardship.
If any Qualified Nonelective Contributions are made, the Company shall keep such
records as necessary to reflect the amount of such contributions made for
purposes of satisfying the limitations of Sections 3.3(c) or 3.8(c).
(v) In the event the Companies maintain two or more plans that are
treated as a single plan for purposes of Sections 401(a)(4) and 410(b) of the
Code (other than Section 410(b)(2)(A)(ii) of the Code), all elective deferrals
made under the two plans shall be treated as made under a single plan, and if
two or more of such plans are permissively aggregated for purposes of Section
401(k) of the Code, such plans shall be treated as a single plan for purposes of
satisfying Sections 401(a)(4) and 410(b) of the Code.
(vi) In determining the Actual Deferral Percentage of a Higher Paid
Eligible Employee, all cash or deferred arrangements in which such Higher Paid
Eligible Employee is eligible to participate shall be treated as a single
arrangement.
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6
(vii) The family aggregation rules of Section 414(q)(6) of the Code
shall apply to any Higher Paid Eligible Employee who is a five percent owner or
one of the ten most highly compensated Higher Paid Eligible Employees. The
Actual Deferral Percentage for the family group, which is treated as one Higher
Paid Eligible Employee, is the Actual Deferral Percentage determined by
combining the contributions and compensation of all eligible Family Members.
Except to the extent taken into account in this Paragraph (vii), the
contributions and compensation of all Family Members are disregarded in
determining the Actual Deferral Percentages for all Employees.
(g) The limitations of this Section 3.3 shall apply to Plan
Years beginning on or after January 1, 1987 and shall be separately applied to
those Eligible Employees who are included in a unit of Employees covered by a
collective bargaining agreement, and to those Eligible Employees who are not
included in such a collective bargaining unit.
3.4 Reinstatement of Reduced Amounts -- Any reduction effected pursuant
to Section 3.3 will remain in effect for the remainder of the Plan Year in which
the reduction occurs and will not be automatically reinstated. A Participant
whose Elective Deferral has been reduced may elect to increase his or her
Elective Deferral effective as of any Entry Date subsequent to notice from the
Administrator that Elective Deferrals may be increased as of a specified Entry
Date. This election must be made in accordance with the procedure described in
Section 3.5.
3.5 Change in Elective Deferrals -- Except as provided in Sections 3.3
and 3.4, any Participant may change his or her Elective Deferral percentage to
increase or decrease said percentage by notifying Fidelity, such change to take
effect as of the next administratively feasible Pay Period.
3.6 Voluntary Reduction of Elective Deferral to Zero -- Notwithstanding
the notice requirements specified in Section 3.5, any Participant may elect to
reduce the level of the Participant's Elective Deferral to zero as of the
beginning of any Pay Period. The reduction will take effect as soon as
practicable following telephone notification by the Participant to Fidelity. A
Participant who has reduced his or her Elective Deferral to zero may again make
Elective Deferrals as of the next administratively feasible Pay Period
subsequent to telephone notification to Fidelity.
3.7 Matching Contributions -- For each Plan Year, commencing on or
after January 1, 1987, subject to limitations imposed by the Internal Revenue
Code, the Companies will match from Net Annual Profits or Net Profits the
Elective Deferral of each Participant at the rate of one-half (1/2) of the
Participant's Elective Deferral on an annual basis, provided that for any Pay
Period the matching amount shall not exceed three percent (3%) of the
Participant's Eligible Compensation for that pay period.
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7
3.8 Limitations on Matching Contributions --
(a) In no event may the Matching Contributions made on behalf of all
Higher Paid Eligible Employees, or forfeitures allocated to the Accounts of such
Employees, who have satisfied the eligibility requirements of Article II with
respect to any Plan Year, result in an Actual Contribution Percentage for such
group of Higher Paid Eligible Employees which exceeds the greater of (i) or (ii)
where:
(i) is an amount equal to 125 percent of the Actual Contribution
Percentage for all Non-Higher Paid Eligible Employees who have satisfied the
eligibility requirements of Article II with respect to such Plan Year; and
(ii) is an amount equal to the Actual Contribution Percentage for all
Non-Higher Paid Eligible Employees who have satisfied the eligibility
requirements of Article II with respect to such Plan Year and two percent (2%),
provided that such amount does not exceed 200 percent of such Actual
Contribution Percentage.
(b) The Administrator shall be authorized to implement rules
authorizing or requiring reductions in Matching Contributions that may be made
by Higher Paid Eligible Employees during the Plan Year (prior to any
contributions to the Trust Fund), so that the limitation of Section 3.8(a) is
satisfied.
(c) The Company may in its discretion make Qualified Nonelective
Contributions to the accounts of certain Non-Higher Paid Eligible Employees to
the extent required to satisfy the limitations of Section 3.8(a).
(d) If the limitation under Section 3.8(a) is exceeded in any Plan
Year, the Excess Amounts made on behalf of Higher Paid Eligible Employees with
respect to a Plan Year (and earnings allocable thereto) shall then be
distributed to such Higher Paid Eligible Employees as soon as practicable after
the end of such Plan Year (or, if forfeitable under the terms of the Plan,
forfeited), but no later than the last day of the immediately following Plan
Year. The Excess Amounts distributed shall include both the Matching
Contributions and the income allocable thereto. The amount of income allocable
to Excess Amounts shall be determined in accordance with the regulations issued
under Section 401(m) of the Code and shall include income for the Plan Year to
which the Excess Amounts relate.
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8
(e) Elective Deferrals and Matching Contributions shall be further
limited to the extent required to prevent prohibited multiple use of the
alternative limitation described in Sections 401(k)(3)(A)(ii)(II) and
401(m)(2)(A)(ii) of the Code and the provisions of Reg. ss.1.401(m)-2(b) and any
further guidance issued thereunder. If such multiple use occurs, the Actual
Contribution Percentage for all Higher Paid Eligible Employees (determined after
applying the foregoing provisions of this Section 3.8) shall be reduced in
accordance with Reg. ss.1.401(m)-2(c) and any further guidance issued thereunder
in order to prevent such multiple use of the alternative limitation.
(f) The Administrator may utilize any combination of the methods
described in Sections 3.8(b), (c) and (d) to assure that the limitations of
Sections 3.8(a) and (e) are satisfied.
(g) For purposes of this Section 3.8, the following definitions
and special rules shall apply:
(i) The term "Annual Earnings" shall have the meaning specified in
Section 3.3(f)(i).
(ii) The term "Actual Contribution Percentage" shall mean, with respect
to any group of actively employed Eligible Employees who have satisfied the
eligibility requirements of Article II for a Plan Year, the average of the
ratios, calculated separately for each such Eligible Employee in the group, of:
(A) The amount of Matching Contributions paid to the Trust Fund for
such Plan Year on behalf of the Eligible Employee plus the amount of forfeitures
allocated to the Eligible Employee's Account, divided by
(B) The Eligible Employee's Annual Earnings, including any Elective
Deferrals made by the Companies to the Plan on behalf of the Eligible Employee
or any pre-tax election contributions under a "cafeteria plan" (as defined in
Section 125 of the Code and applicable regulations) maintained by the Companies
for such Plan Year.
Matching Contributions and forfeitures shall be taken into account for
a Plan Year only if such amounts are allocated to the Eligible Employee's
Account as of a date within that Plan Year, such amounts are actually paid to
the Trust no later than 12 months after the Plan Year to which the contribution
relates and such amounts are contributed on account of Elective Deferrals for
such Plan Year.
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9
(iii) The term "Excess Amounts" shall mean with respect to each Higher
Paid Eligible Employee, the amount equal to the total Matching Contributions
made on behalf of the Eligible Employee together with the forfeitures allocated
to the Eligible Employee's Account (determined prior to the application of the
leveling procedure described below) minus the product of the Eligible Employee's
Actual Contribution Percentage (determined after the leveling procedure
described below) multiplied by the amount specified in Section 3.8(g)(ii)(B)
above. In accordance with the regulations issued under Section 401(m) of the
Code, Excess Amounts shall be determined by a leveling procedure under which the
Actual Contribution Percentage of the Higher Paid Eligible Employee with the
highest such percentage shall be reduced to the extent required to enable the
limitation of Section 3.8(a) to be satisfied or, if it results in a lower
reduction, to the extent required to cause such Higher Paid Eligible Employee's
Actual Contribution Percentage to equal the Actual Contribution Percentage of
the Higher Paid Eligible Employee with the next highest Actual Contribution
Percentage. This leveling procedure shall be repeated until the limitation of
Section 3.8(a) is satisfied.
(iv) The term "Qualified Nonelective Contributions" shall have the
meaning specified in Section 3.3(f)(iv).
(v) In the event the Companies maintain two or more plans that are
treated as a single plan for purposes of Sections 401(a)(4) and 410(b) of the
Code (other than Section 410(b)(2)(A)(ii) of the Code), all Matching
Contributions and forfeitures under the two plans shall be treated as made under
a single plan, and if two or more of such plans are permissibly aggregated for
purposes of Section 401(m) of the Code, such plans shall be treated as a single
plan for purposes of satisfying Sections 401(a)(4) and 410(b) of the Code.
(vi) In determining the Actual Contribution Percentage of a Higher Paid
Eligible Employee, all plans in which such Higher Paid Eligible Employee is
eligible to participate shall be treated as a single arrangement.
(vii) The family aggregation rules of Section 414(q)(6) of the Code
shall apply to any Higher Paid Eligible Employee who is a five percent owner or
one of the ten most highly compensated Higher Paid Eligible Employees. The
Actual Contribution Percentage for the family group, which is treated as one
Higher Paid Eligible Employee, is the Actual Contribution Percentage determined
by combining the contributions and compensation of all eligible Family Members.
Except to the extent taken into account in this Paragraph (vii), the
contributions and compensation of all Family Members are disregarded in
determining the Actual Contribution Percentages for all Employees.
(h) The limitations of this Section 3.8 shall apply to Plan Years
beginning on or after January 1, 1987, and shall apply only to those Eligible
Employees who are not included in a unit of employees covered by a collective
bargaining unit.
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10
3.9 Forfeitures --
(a) In the event that a Participant incurs a Severance from
Service prior to attaining a Nonforfeitable right to the Participant's Matching
Contribution, the Matching Contribution Account will be forfeited as of the
first day of the month immediately following the earliest of: (i) the date on
which the Participant incurs a Period of Severance of five consecutive years;
(ii) death; or (iii) the date on which the Participant's Employee Account is
distributed in accordance with Article VI. Forfeitures of Matching Contributions
will be used to reduce future contributions of the Companies to the Plan.
(b) If, in connection with his Severance from Service, a Participant
received a distribution of his Employee Account when he did not have a
Nonforfeitable right to his Matching Contribution Account, the Matching
Contributions that were forfeited, unadjusted by any subsequent gains or losses,
shall be restored if he again becomes an Employee prior to incurring a Period of
Severance of five consecutive years, performs an Hour of Service, and repays the
full value of his prior distributions, unadjusted for subsequent gains and
losses, before the first to occur of (i) the end of the five year period
beginning with the date he again becomes an Employee or (ii) the date on which
he incurs a Period of Severance of five consecutive years.
3.10 Rollover Contributions and Transfers --
(a) Effective April 1, 1991, Participants may transfer into the Plan
qualifying rollover amounts (as defined in Section 402 of the Code) received
from other qualified plans subject to Section 401(k) or Section 401(m) of the
Code; qualified defined contribution pension or profit sharing plans, provided
that no federal income tax has been required to have been paid previously on
such amounts; or rollover contributions from an individual retirement account
described in Section 408(d)(3)(ii) of the Code (referred to herein as a "conduit
IRA"). Such transfers will be referred to as "rollover contributions" and will
be subject to the following conditions:
(i) the transferred funds are received by the Trustee no later than
sixty (60) days from receipt by the Employee of a distribution from another
qualified Section 401(k) or Section 401(m) plan or, in the event that the funds
are transferred from a conduit IRA, no later than sixty (60) days from the date
that the Participant receives such funds from the individual retirement account,
subject, however, to (v) below where applicable;
(ii) the amount of such rollover contributions shall not exceed the
limitations set forth in Section 402 of the Code;
(iii) rollover contributions shall be taken into account by the
Administrator in determining the Participant's eligibility for a loan pursuant
to Article VII;
(iv) rollover contributions may be distributed at the request of
the Participant, subject to the same administrative procedures as apply to other
distributions;
<PAGE>
11
(v) rollover contributions may not be received by the Trustee
earlier than the Entry Date upon which the Participant elects to join the Plan;
(vi) rollover contributions transferred pursuant to this Section
3.10 shall be credited to the Participant's Rollover Contribution Account.
Rollover contributions will be invested upon receipt by the Trustee;
(vii) no rollover contribution will be accepted unless (a) the Employee
on whose behalf the rollover contribution will be made is either a Participant
or has notified the Administrator that he intends to become a Participant on the
first date on which he is eligible therefor; and (b) all required information,
including selection of specific investment accounts, is provided to Fidelity.
When the rollover contribution has been deposited, any further change in
investment allocation of future deferrals or transfer of account balances
between investment funds will be effected through the procedures set forth in
Sections 4.2 and 4.3.
(viii) under no circumstances shall the Administrator accept as a
rollover contribution amounts which have previously been subject to federal
income tax.
(b) Effective January 1, 1993, Participants may direct that "eligible
rollover distributions," as defined in Section 402(c) of the Code, be
transferred directly to the Plan. Rules similar to those applicable to "rollover
contributions" shall apply to amounts transferred directly to the Plan.
(c) Participants who are also covered under the Raytheon Stock
Ownership Plan or the Raytheon Stock Ownership Plan for Specified Hourly Payroll
Employees and who are entitled to diversify their accounts under either of such
plans, may direct that the portion of their account which is eligible for
diversification under such plan be transferred to the Plan. Rules similar to
those applicable to "rollover contributions" shall apply to amounts transferred
to this Plan except that such transferred amounts shall not be eligible for
loans or withdrawals.
3.11 Refund of Contributions to the Companies -- Notwithstanding the
provisions of Article XII, if, or to the extent that, the Companies' deductions
for contributions made to the Plan are disallowed, the Companies will have the
right to obtain the return of any such contributions for a period of one year
from the date of disallowance. For this purpose, all Elective Deferrals and
Matching Contributions are made subject to the conditions that they are
deductible under the Code for the taxable year of the Companies for which the
contribution is made. Furthermore, any contribution made by the Companies on the
basis of a mistake in fact may be returned to the Companies within one year from
the date such contribution was made.
<PAGE>
12
ARTICLE IV - INVESTMENT OF ACCOUNTS
4.1 Election of Investment Funds -- Upon enrollment in the Plan, each
Participant shall direct that the funds in the Participant's Employee Account
and Matching Contribution Account be invested in increments of one percent (1%)
in one or more of the following investment funds:
Fund A - an equity fund designated by the Administrator;
Fund B - a fixed income fund designated by the Administrator;
Fund C - Raytheon Company common stock fund;
Fund D - a stock index fund designated by the Administrator;
Fund E - a balanced fund designated by the Administrator;
Fund F - a growth fund, designated by the Administrator, investing
primarily in equities of companies of all types and sizes;
Fund G - a growth fund, designated by the Administrator, investing
primarily in equities of well-known and established companies.
In its discretion, the Administrator may from time to time designate
new funds and, where appropriate, preclude investment in existing funds and
provide for the transfer of Accounts invested in those funds to other funds
selected by the Participant or, if no such election is made, to Fund B or
similar low risk fixed income fund as determined by the Administrator in its
discretion. Each election will apply to both accounts so that the Employee
Account and Matching Contribution Account of the Participant will be invested in
the same percentages in the one or more investment funds selected by the
Participant.
4.2 Change in Investment Allocation of Future Deferrals -- Each
Participant may elect to change the investment allocation of future Elective
Deferrals, Matching Contributions and rollover contributions effective as of the
first administratively feasible Business Day subsequent to telephone notice to
Fidelity. Any changes must be made either in increments of one percent (1%) of
the Participant's Account or in a specified whole dollar amount and must result
in a total investment of one hundred percent (100%) of the Participant's
Account.
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13
4.3 Transfer of Account Balances Between Investment Funds -- Each
Participant may elect to transfer all or a portion of the amount in the
Participant's Employee Account, Matching Contribution Account and Rollover
Contribution Account between investment funds effective as of the first
administratively feasible Business Day following telephone notice to Fidelity.
Such transfers must be made in either one percent (1%) increments of the entire
Account or in a specified amount in whole dollars and, as of the completion of
the transfer, must result in investment of one hundred percent (100%) of the
Account. Transfers shall be effected by telephone notice to Fidelity. In
determining the amount of the transfer, the Participant's Account shall be
valued as of the close of business on the Business Day on which telephone notice
is received; provided, however, that in any case where the telephone notice is
received after 4:00 p.m. Eastern Time (daylight or standard, whichever is in
effect on the date of the call), the Account shall be valued as of the close of
business on the next Business Day.
4.4 Ownership Status of Funds -- The Trustee shall be the owner of
record of the assets in the funds specified as Funds A, B, C, D and E and such
other funds as may be established by the Administrator. The Administrator shall
have records maintained as of the Valuation Date for each fund allocating a
portion of the fund to each Participant who has elected that his or her Account
be invested in such fund. The records shall reflect each Participant's portion
of Funds A, B, D and E, and such other funds as may be established by the
Administrator, in a cash amount and shall reflect each Participant's portion of
Fund C in cash and unitized shares of stock.
4.5 Voting Rights -- Participants whose Account has shares of
participation in the Raytheon Company Common Stock Fund on the last business day
of the second month preceding the record date (the "Voting Eligibility Date")
for any meeting of stockholders have the right to instruct the Trustee as to
voting at such meeting. The number of votes is determined by dividing the value
of the shares in the Participant's Account in the Raytheon Common Stock Fund by
the closing price of Raytheon Common Stock on the Voting Eligibility Date. If
the Trustee has not received instructions from a Participant as to voting of
shares within a specified time, then the Trustee shall not vote those shares. If
a Participant furnishes the Trustee with a signed vote direction card without
indicating a voting choice thereon, the Trustee shall vote Participant's shares
as recommended by management. In addition, each Participant shall have the right
to accept or reject any tender or exchange offer for shares of common stock. The
Trustee shall vote (or tender or exchange) all combined fractional shares of
Raytheon Common Stock to the extent possible in the same proportion as the
shares which have been voted (or tendered or exchanged) by each Participant. Any
instructions as to voting (or tender or exchange) received from individual
Participants shall be held in confidence by the Trustee and shall not be
divulged to the Companies or to any officer or employee thereof or to any other
person.
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14
ARTICLE V - VESTING
5.1 Employee and Rollover Contribution Accounts -- Each Participant
shall have a Nonforfeitable right to any amounts in the Participant's Employee
and Rollover Contribution Accounts.
5.2 Matching Contribution Account -- Each Participant shall have a
Nonforfeitable right to the Participant's Matching Contribution Account upon the
earliest of:
(a) Completion of a Period of Service of five (5) years commencing on
or after June 30, 1986 (for purposes of determining the length of a Period of
Service under this paragraph only, vesting service credited to an Employee under
Section 6.2(b) of the Speed Queen Company Retirement Savings Plan will be
credited to an Eligible Employee regardless of whether such vesting service was
earned prior to June 30, 1986); or
(b) Completion of a Period of Participation of three (3) years
subsequent to fulfillment of the eligibility requirements in Section 2.1;
(c) The Participant's Retirement, death while an Employee,
Disability or attainment of Normal Retirement Age; or
(d) The date of layoff of Participants laid off as a result of the
permanent closing of the Oxnard plant.
Notwithstanding anything in the Plan to the contrary, if the rate of
Matching Contributions, determined after application of the corrective
mechanisms described in Section 3.3, discriminates in favor of Higher Paid
Eligible Employees, any such amounts attributable to any Excess Amounts (as
described in Subsection 3.3(f)(iii)) of each affected Higher Paid Eligible
Employee shall be forfeited so that the rate of Matching Contribution is
nondiscriminatory. Any such forfeitures shall be made no later than the end of
the Plan Year following the Plan Year for which the Matching Contribution was
made and shall be treated in accordance with Section 3.9.
5.3 Break in Service Rules
(a) Periods of Service -- In determining the length of a Period of
Service, the Administrator shall include all Periods of Service, except the
following Periods of Service shall not be taken into account:
(i) a Period of Service prior to a Period of Severance of twelve (12)
months or more, unless subsequent to said Period of Severance the Participant
completes a Period of Service of at least twelve (12) months; and
(ii) in the case of a Participant who has incurred a Period of
Severance which equals or exceeds five years, the Period of Service after such
Period of Severance shall not be taken into account for purposes of determining
the nonforfeitable interest of such Participant in the Matching Contributions
allocated to his Account prior to such Period of Severance.
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15
(b) Periods of Severance -- In determining the length of a Period of
Service for purposes of Section 14.36, the Administrator shall exclude all
Periods of Severance, except that in the event a Participant returns from a
quit, discharge, or Retirement, within twelve (12) months from the earlier of:
(i) the date of the quit, discharge, or Retirement, or
(ii) if the Participant was absent from employment for reasons such as
layoff or Authorized Leave of Absence on the day of the quit, discharge, or
Retirement, the first day of such absence, the period of absence will be
included as a Period of Service.
(c) Other Periods -- In making the determinations described in
subsections (a) and (b) of this Section 5.3, the second, third, and fourth
consecutive years of a Layoff (from the first anniversary of the last day paid
to the fourth anniversary of the last day paid) and any period in excess of one
(1) year of an Authorized Leave of Absence shall be regarded as neither a Period
of Service nor a Period of Severance.
ARTICLE VI - WITHDRAWALS AND DISTRIBUTIONS
6.1 In-Service Withdrawals - Matching Contributions -- Upon completion
of a Period of Participation of five (5) years, a Participant may withdraw,
subject to both a minimum withdrawal amount of $250 and the requirement that a
Participant may withdraw no more than twice during a Plan Year, if no loans are
outstanding, all or part of the Participant's Matching Contribution Account.
Withdrawals will be based upon the value of the Account as determined under
Section 6.8. Withdrawals from Funds A, B, D and E, and such other funds as may
be established by the Administrator, will be made in cash; withdrawals from Fund
C will be made in cash or stock (with cash for fractional or uninvested shares)
as directed by the Participant. Funds for the withdrawal will be taken on a pro
rata basis against the Participant's investment fund balances in the
Participant's Matching Contribution Account.
6.2 In-Service Withdrawal - Employee Account -- While in a Period of
Service, a Participant may withdraw assets from his or her Account as follows:
(i) all or a portion of the Participant's Employee Account upon
attainment of age 59 1/2; or
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16
(ii) a distributable amount (as defined in Treas. Reg. Section
1.401(k)-1(d)(2)) on account of a hardship as defined in the regulation. A
distribution is made on account of a hardship only if the distribution both is
made on account of an immediate and heavy financial need of the Participant and
is necessary to satisfy the financial need. In determining the amount required
to satisfy the financial need, the Administrator shall take into account the
federal, state and local income taxes or penalties reasonably anticipated to
result from the withdrawal. The distributable amount is equal to the
Participant's total Elective Deferrals as of the date of distribution reduced by
the amount of previous distributions on account of hardship and increased by
that portion of income allocable to Elective Deferrals which was credited to the
Participant's Account as of December 31, 1988. Withdrawals from the Employee
Accounts of less than $250 will not be permitted. Withdrawals will be based upon
the value of the Account as determined under Section 6.8 and will be effected by
telephone notice to Fidelity. Payment of the amount withdrawn will be made as
soon as reasonably practicable after the effective date of the withdrawal.
Withdrawals from Funds A, B, D and E, and such other funds as may be established
by the Administrator, will be made in cash; withdrawals from Fund C will be made
in cash or stock (with cash for fractional or unissued shares), as elected by
the Participant. Funds for the withdrawal will be taken on a pro rata basis
against the Participant's investment fund balances in the Participant's Employee
Account.
6.3 In-Service Withdrawal - Rollover Contribution Account -- A
Participant may withdraw all or a portion of the Participant's Rollover
Contribution Account. Withdrawals will be based upon the value of the account as
determined under Section 6.8 and will be effected by telephone notice to
Fidelity. Payment of the amount withdrawn will be made as soon as reasonably
practicable after the effective date of the withdrawal. Withdrawals from Funds
A, B and D will be made in cash. Withdrawals from Fund C will be made in cash or
stock (with cash for fractional or unissued shares) as elected by the
Participant.
6.4 Requirements For Financial Hardship Withdrawals --
(a) A Participant requesting a withdrawal of the distributable amount
of the Participant's Employee Account due to reasons of immediate and heavy
financial need must submit such documentation or information in other form as
required by the Administrator and shall advise Fidelity by telephone notice or
such other means as established by the Administrator's rules then in effect of
the existence of an immediate and heavy financial need and the fact that the
need will be satisfied by the requested distribution.
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17
(b) The Participant shall represent that this financial need cannot be
satisfied by any of the following sources: through reimbursement or compensation
by insurance or otherwise; by liquidation of the Participant's assets; by
cessation of Elective Deferrals under the Plan; or by other distributions or
non-taxable (at the time of the loan) loans currently available from plans
maintained by the Employer or by any other employer, or by borrowing from
commercial sources on reasonable commercial terms.
(c) For purposes of Section 6.2, "immediate and heavy financial need"
is limited to financial need arising from the following specific causes:
expenses for medical care (as described in Section 213(d) of the Code)
previously incurred by the Participant, the Participant's spouse or any
dependents (as defined in Section 152 of the Code) of the Participant, or which
are necessary for these persons to obtain medical care described in Section
213(d) of the Code; costs directly related to the purchase of a principal
residence for the Participant (excluding mortgage payments); payment of tuition
and related educational expenses for the next twelve months of post-secondary
education for the Participant, or the Participant's spouse, children or
dependents (as defined in Section 152); expenses relating to the need to prevent
the eviction from or foreclosure on the Participant's principal residence; or
any other circumstances, as determined by the Administrator based upon all the
relevant facts, establishing substantial justification for the withdrawal.
(d) If a Participant receives a withdrawal for reasons of financial
hardship, his or her Elective Deferrals shall be reduced to six percent (6%), if
in excess thereof as of the date of distribution, and shall not be increased
during the twelve months immediately subsequent to the date of distribution.
6.5 Redeposits Prohibited -- No amount withdrawn pursuant to Section
6.1, Section 6.2 or Section 6.3 may be redeposited in the Plan.
6.6 Distribution -- Distribution of the Participant's Employee Account
and Rollover Contribution Account and, if the Participant has a Nonforfeitable
right to his or her Matching Contribution Account pursuant to Section 5.2, the
Matching Contribution Account, will be made at the direction of the Participant
(or his legal representative or Beneficiary in the case of his Disability or
death) upon the Retirement, Disability (as defined in Section 14.12), death, or
Severance from Service (as defined in Section 14.46) of the Participant. In the
event the Participant dies or his Severance from Service occurs after his Normal
Retirement Age, or if the value of the Nonforfeitable portion of the
Participant's Account as of the Valuation Date which coincides with or
immediately precedes the date of distribution is not in excess of $3,500, the
Administrator shall cause the distribution to automatically be made. Payment
will be made in the form of a lump sum distribution of the entire amount in the
Participant's Account (to which the Participant has a Nonforfeitable right)
which will be paid as soon as practicable following notification to the Benefits
and Services Department, Raytheon Company, Lexington, Massachusetts, of the
Retirement, death, Disability or Severance from Service and a telephone request
by the Participant to Fidelity for the distribution. Distributions will be base
<PAGE>
18
upon the Value of the Account as determined under Section 6.8. Distribution of
the amounts in said accounts in the funds designated in Funds A, B, D and E, and
such other funds as may be established by the Administrator, will be made in
cash. Distribution of any amount in said accounts in Fund C (Raytheon Company
stock) will be made in either cash or, if elected by the Participant or, in the
case of death, the Participant's Beneficiary, stock. Partial deferrals will not
be permitted. If there is no Beneficiary surviving a deceased Participant at the
time payment of a Participant's Account is to be made, such payment shall be
made in a lump sum to the person or persons in the first following class of
successive Beneficiaries surviving, any testamentary devise or bequest to the
contrary notwithstanding: the Participant's (a) spouse, (b) children and issue
of deceased children by right of representation, (c) parents, (d) brothers and
sisters and issue of deceased brothers and sisters by right of representation,
or (e) executors or administrators. If no Beneficiary can be located during a
period of seven (7) years from the date of death, the amount of the distribution
shall revert to the Trust and be treated in the same manner as a forfeiture
under Section 3.8.
Except as provided in Section 401(a)(9) of the Code as set forth in
this Section, benefits in the Plan will be distributed to each Participant not
later than the sixtieth (60th) day after the close of the Plan Year in which the
latest of the following events occurs:
(1) attainment by the Participant of Normal Retirement Age;
(2) the tenth (10th) anniversary of the date on which
Participant commenced participation in the Plan; or
(3) Participant's Severance from Service.
If the amount of the benefit payable to a Participant has not been
ascertained by the sixtieth (60th) day after the close of the Plan Year in which
the latest of the three events described in clauses (1), (2) and (3) above
occurred, or Participant cannot be located after reasonable efforts to do so,
then payment retroactive to said sixtieth (60th) day after the close of the Plan
Year in which the latest of the three events occurred may be made no later than
sixty (60) days after the later of the earliest date on which the amount of such
payment can be ascertained under the Plan or the earliest date on which the
Participant is located.
A lump sum distribution of a Participant's Account will be made not
later than April 1 of the calendar year following the calendar year in which the
Participant attains age 70 1/2 or, for Participants who have attained age 70 1/2
before January 1, 1988, and have elected to defer distribution in accordance
with procedures established by the Administrator, the calendar year in which the
Participant retires.
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19
In the event amounts are transferred to this Plan from another plan
qualified under Section 401(a) of the Code (other than amounts described in
Section 3.10(b)), any distribution or withdrawal rights available to the
Participant under such other plan which are protected under Section 411(d)(6) of
the Code shall be available to the Participant under this Plan.
6.7 Direct Rollovers -- Effective January 1, 1993, a distributee may
elect, at the time and in the manner prescribed by the Administrator, to have
any portion of an eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct rollover. For purposes
of this paragraph, the following terms shall have the following meanings:
(a) Eligible rollover distribution: An eligible rollover distribution
is any distribution of all or any portion of the balance to the credit of the
distributee, except that an eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal periodic payments
(not less frequently than annually) made for the life (or life expectancy) of
the distributee or the joint lives (or joint life expectancies) of the
distributee and the distributee's beneficiary, or for a specified period of 10
years or more; any distribution to the extent such distribution is required
under Section 401(a)(9) of the Code; and the portion of any distribution that is
not includible in gross income.
(b) Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in Section 408(a) of the Code, an
individual retirement annuity described in Section 408(b) of the Code, an
annuity plan described in Section 403(a) of the Code or a qualified trust
described in Section 401(a) of the Code that accepts the distributee's eligible
rollover distribution. However, in the case of an eligible rollover distribution
to the surviving spouse, the term is limited to an individual retirement account
or individual retirement annuity.
(c) Distributee: A distributee includes a Participant or former
Participant. In addition, the Participant's or former Participant's surviving
spouse and the Participant's spouse or former spouse who is the alternate payee
under a qualified domestic relations order, as defined in Section 414(p) of the
Code, are distributees with regard to the interest of the spouse or former
spouse.
(d) Direct Rollover: A direct rollover is a payment by the Plan
to the eligible retirement plan specified by the distributee.
<PAGE>
20
6.8 Determination of Amount of Withdrawal or Distribution -- In
determining the amount of any withdrawal or distribution hereunder, the
Participant's Account shall be valued as of the close of business on the
Business Day on which telephone notice is received; provided, however, that in
any case where the telephone notice is received after 4:00 p.m. Eastern Time
(daylight or standard, whichever is in effect on the date of the call), the
Account shall be valued as of the close of business on the next Business Day.
ARTICLE VII - LOANS
7.1 Availability of Loans -- Effective as of the date shown on Appendix
A which is applicable to the bargaining unit in which Participant is employed,
Participants may borrow against all or a portion of the balance in the
Participant's Employee Account and Rollover Contribution Account subject to the
restrictions set forth in this Article. Participants who have incurred a
Severance from Service will not be eligible for a Plan loan. The Vice President,
Human Resources, is authorized to administer this loan program.
7.2 Minimum Amount of Loan - No loan of less than $500 will be
permitted.
7.3 Maximum Amount of Loan - No loan in excess of fifty percent (50%)
of the aggregate value of a Participant's Employee Account and Rollover
Contribution Account and the Nonforfeitable portion of Participant's Matching
Contribution Account balances will be permitted. In addition, the limits imposed
by the Internal Revenue Code and any other requirements of applicable statute or
regulation will be applied. Under the current requirements of the Internal
Revenue Code, if the aggregate value of a Participant's Employee Account and
Rollover Contribution Account and Nonforfeitable portion of the Matching
Contribution Account exceeds $20,000, the loan cannot exceed the lesser of
one-half (1/2) the Nonforfeitable aggregate value or $50,000 reduced by the
excess of (a) the highest outstanding balance of loans from the Plan during the
one-year period ending on the day before the date on which such loan was made
over (b) the outstanding balance of loans from the Plan on the date on which
such loan was made.
7.4 Effective Date of Loans -- Loans will be effective as
specified in the Administrator's rules then in effect.
7.5 Repayment Schedule - The Participant may select a repayment
schedule of 1, 2, 3, 4 or 5 years. If the loan is used to acquire any dwelling
which, within a reasonable time is to be used (determined at the time the loan
is made) as the principal residence of the Participant, the repayment period may
be extended up to 15 years at the election of the Participant. All repayments
will be made through payroll deductions in accordance with the loan agreement
executed at the time the loan is made, except that, in the event of the sale of
all or a portion of the business of the Employer or one of the Companies, or
other unusual circumstances, the Administrator, through uniform and equitable
rules, may establish other means of repayment. The loan agreement will permit
repayment of the entire outstanding balance in one lump sum. The minimum
repayment amount per pay period is $10 for Participants paid weekly and $50 for
Participants paid monthly. The repayment schedule shall provide for
substantially level amortization of the loan.
<PAGE>
21
7.6 Limit on Number of Loans -- No more than two loans may be
outstanding at any time.
7.7 Interest Rate -- The interest rate for a loan pursuant to this
Article will be equal to the prime rate published in The Wall Street Journal on
the first business day in June and December of each year. The rate published on
the first business day in June will apply to loans which are effective at any
time during the period July 1 through December 31 thereafter; the rate published
on the first business day of December will apply to loans which are effective at
any time during the period January 1 through June 30 thereafter.
7.8 Effect Upon Participants Employee Account -- Upon the granting of a
loan to a Participant by the Administrator, the allocations in the Participant's
Account to the respective investment funds will be reduced on a pro rata basis
and replaced by the loan balance which will be designated as an asset in the
Account. Such reduction shall be effected by reducing the Participant's Accounts
in the following sequence, with no reduction of the succeeding Accounts until
prior Accounts have been exhausted by the loan: Matching Contribution Account;
Employee Account; and Rollover Contribution Account. Upon repayment of the
principal and interest, the loan balance will be reduced, the Participant
Accounts will be increased in the reverse order in which they were exhausted by
the loan, and the loan payments will be allocated to the respective investment
funds in accordance with the investment election then in effect.
7.9 Effect of Severance From Service and Non-Payment -- In the event
that a loan remains outstanding upon the Severance from Service of a
Participant, the Participant will be given the option on continuing to repay the
outstanding loan. In any case where payments on the outstanding loan are not
made within ninety (90) days of the Participant's Severance from Service Date,
the amount of any unpaid principal will be deducted from the Participant's
Account and reported as a distribution. If, as a result of Layoff or Authorized
Leave of Absence, a Participant, although still in a Period of Service, is not
being compensated through the Employer's payroll system, loan payments will be
suspended until the earliest of the first pay date after Participant returns to
active employment, the Participant's Severance from Service Date, or the
expiration of twelve (12) months from the date of the suspension. In the event
the Participant does not return to active employment with the Employer, the
Participant will be given the option of continuing to repay the outstanding
loan. If the Participant fails to resume payments on the loan, the outstanding
loan will be reported as a distribution. In no event, however, shall the loan be
deducted from the Participant's Account earlier than the date on which the
Participant (i) incurs a Severance from Service or (ii) attains age 59-1/2.
<PAGE>
22
ARTICLE VIII - LIMITATIONS OF SECTION 415 OF THE CODE
8.1 Maximum Permissible Amount of a Participant's Annual Addition --
The total for any Limitation Year of the annual additions to a Participant's
Account under this Plan when added to the annual additions to a Participant's
account under any qualified defined contribution plan maintained by the Employer
shall not exceed the lesser of (i) twenty-five percent (25%) of total
compensation from the Employer, and (ii) $30,000 or, if greater, one-fourth of
the defined benefit dollar limitation set forth in Section 415(b)(1) of the Code
as in effect for the Limitation Year.
For purposes of this Section 8.1, the term "annual addition" shall
mean, with respect to any Limitation Year, Matching Contributions, Qualified
Nonelective Contributions, forfeitures and Elective Deferrals to this Plan, plus
the sum of the following amounts allocable for such Plan Year to the
Participant's accounts in all other qualified plans maintained by the Employer
in which he participates: (1) employer contributions (including pre-tax
contributions), (2) forfeitures which have been reallocated to the Participant's
account, (3) Participant after-tax contributions; and (4) amounts described in
Sections 415(l)(1) and 419A(d)(2) of the Code.
For purposes of this Section 8.1, the term "compensation" shall mean
all amounts paid to an Employee for personal services actually rendered to the
Companies and Affiliates, including, but not limited to, wages, salary,
commissions, bonuses, overtime and other premium pay as specified in Reg.
Section 1.415-2(d)(2), but excluding deferred compensation, stock options, and
other distributions which receive special tax treatment as specified in Reg.
Section 1.415-2(d)(3).
8.2 Reduction of Annual Additions -- In the event it is determined that
the annual additions to a Participant's Account for any limitation year would be
in excess of the limitations of Section 8.1, such annual additions shall be
reduced to the extent necessary to bring it within such limitations. If, as a
result of the allocation of forfeitures, a reasonable error in estimating a
Participant's Eligible Compensation, a reasonable error in determining the
amount of Elective Deferrals that may be made with respect to any Participant,
or under other limited facts and circumstances which the Internal Revenue
Service finds justify the availability of the remedies contained herein, the
Administrator shall reduce the annual additions which have been made to a
Participant's Account to the acceptable limit by the following procedures, in
the following order:
<PAGE>
23
(a) by returning to the Participant the excess Elective Deferrals
(and any associated earnings) for the Limitation Year;
(b) to the extent the limitation is still exceeded, excess annual
additions in the Participant's Account (and associated earnings) shall be used
to reduce Elective Deferrals and Matching Contributions for the next Limitation
Year (and succeeding Limitation Years, as necessary) for that Participant if the
Participant is covered by the Plan at the end of such Limitation Year; and
(c) in the event the Participant is not covered by the Plan at the end
of the Limitation Year, any excess annual additions which remain must, as
provided in Reg. ss.1.415-6(b)(6)(ii), be held unallocated in a suspense account
for the Limitation Year and reallocated in the next Limitation Year to all of
the remaining Participants in proportion to their Elective Deferrals in such
Plan Year.
8.3 Coordination with Limitation on Benefit from All Plans --
Notwithstanding any other provisions in this Plan to the contrary, in the case
of a Participant who also participates in any qualified defined benefit plan
which is maintained by the Employer (whether or not terminated), the sum of the
defined benefit plan fraction and the defined contribution plan fraction may not
exceed 1.0 for any Limitation Year. The defined benefit plan fraction for any
Limitation Year is a fraction, the numerator of which is the projected annual
benefit of the Participant under the plan (determined as of the close of the
Limitation Year); and the denominator of which is the lesser of (i) the product
of 1.25, multiplied by the dollar limitation applicable to defined benefit
plans, in effect under applicable law for such Limitation Year; or (ii) the
product of 1.4 multiplied by one hundred percent (100%) of the Participant's
average compensation for the three consecutive calendar years during which he
had the highest aggregate compensation from the Employer. The defined
contribution plan fraction for any Limitation Year is a fraction, the numerator
of which is the sum of the annual additions (as defined in Section 8.1) to the
Participant's Accounts as of the close of the Limitation Year; and the
denominator of which is the sum of the lesser of the following amounts
determined for the current Limitation Year and each prior Limitation Year: (i)
the product of 1.25 multiplied by the dollar limitation applicable to defined
contribution plans, in effect under applicable law for the Limitation Year; or
(ii) the product of 1.4 multiplied by 25% of such Participant's total
compensation for the Limitation Year. In the event that the limitation set forth
above is exceeded, adjustments shall be made in the defined benefit plan.
8.4 This Article VIII shall be effective for Limitation Years
beginning on or after January 1, 1987.
<PAGE>
24
ARTICLE IX - LIMITATIONS OF SECTION 416 OF THE CODE
9.1 General Rule -- In the event that the Plan covers Eligible
Employees who are not included in a unit of Employees covered by a collective
bargaining agreement and becomes top heavy with respect to a Plan Year
commencing on or after January 1, 1984, the provisions of this Article shall
apply and shall supersede any conflicting provisions in the Plan.
9.2 Definitions --
(a) Key Employee: Any Employee or former Employee (and the
Beneficiaries of such Employee) who at any time during the determination period
was an officer of the Employer, an owner (or considered an owner under Section
415(c)(1)(A) of the Code) of one of the ten largest interests in the Employer if
such individual's compensation exceeds 150 percent of the dollar limitation
under Section 415(c)(1)(A) of the Code, a five percent (5%) owner of the
Employer, or a one percent (1%) owner of the Employer who has an annual
compensation of more than $150,000. The determination period of the Plan is the
Plan Year containing the determination date and the four (4) preceding Plan
Years. The determination of who is a Key Employee will be made in accordance
with Section 416(i)(1) of the Code and the regulations thereunder.
(b) Non-Key Employee: Any Employee who is not a Key Employee.
(c) Top-Heavy Ratio:
(i) If the Employer maintains one or more defined benefit plans and the
Employer has never maintained any defined contribution plans (including any
simplified employee pension plan) which has covered or could cover a Participant
in this Plan, the Top-Heavy Ratio is a fraction, the numerator of which is the
sum of the present value of accrued benefits of all Key Employees as of the
determination date (including any part of any accrued benefit distributed in the
five-year period ending on the determination date), and the denominator of which
is the sum of all accrued benefits (including any part of any accrued benefit
distributed in the five-year period ending on the determination date) of all
Participants as of the determination date.
(ii) If the Employer maintains one or more defined contribution plans
(including any simplified employee pension plan) and the Employer maintains or
has maintained one or more defined benefit plans which have covered or could
cover a Participant in this Plan, the Top-Heavy Ratio is a fraction, the
numerator of which is the sum of account balances under the defined contribution
plans for all Key Employees and the present value of accrued benefits under the
defined benefit plans for all Key Employees, and the denominator of which is the
sum of the account balances under the defined contribution plans for all
Participants and the present value of accrued benefits under the defined benefit
plans for all Participants. Both the numerator and denominator of the Top-Heavy
Ratio are adjusted for any distribution of an account balance or an accrued
benefit made in the five-year period ending on the determination date and any
contribution due but unpaid as of the determination date.
<PAGE>
25
(iii) For purposes of (i) and (ii) above, the value of account balances
and the present value of accrued benefits will be determined as of the most
recent valuation date that falls within or ends with the 12-month period ending
on the determination date. The account balances and accrued benefits of a
Participant who is not a Key Employee but who was a Key Employee in a prior year
will be disregarded. The calculation of the Top-Heavy Ratio, and the extent to
which distributions, rollovers, and transfers are taken into account will be
made in accordance with Section 416 of the Code and the regulations thereunder.
Deductible Employee contributions will not be taken into account for purposes of
computing the Top-Heavy Ratio. When aggregating plans, the value of account
balances and accrued benefits will be calculated with reference to the
determination dates that fall within the same calendar year. The accrued benefit
of a Participant other than a Key Employee shall be determined under (a) the
method, if any, that uniformly applies for accrual purposes under all defined
benefit plans maintained by the Employer, or (b) if there is no such method, as
if such benefit accrued not more rapidly than the slowest accrual rate permitted
under the fractional rule of Section 411(b)(1)(C) of the Code.
(d) Permissive aggregation group: The required aggregation group of
plans plus any other plan or plans of the Employer which, when considered as a
group with the required aggregation group would continue to satisfy the
requirements of Sections 401(a)(4) and 410 of the Code.
(e) Required aggregation group: (i) Each qualified plan of the Employer
in which at least one Key Employee participates, and (ii) any other qualified
plan of the Employer which enables a plan described in (i) to meet the
requirements of Sections 401(a)(4) and 410 of the Code.
(f) Determination date: For any Plan Year subsequent to the first Plan
Year, the last day of the preceding Plan Year. For the first Plan Year of the
Plan, the last day of that year.
(g) Valuation date: The last day of each Plan Year.
(h) Present Value: Present Value shall be based only on the interest
rate used by the Administrator to determine compliance with the funding
requirements under the Retirement Act and the mortality rates specified on an
appropriate current unisex table.
9.3 Determination as to Whether the Plan is Top Heavy -- The
Administrator shall determine whether the Plan is top heavy within the meaning
of Section 416. The Plan shall be top heavy for any Plan Year beginning after
December 31, 1983, if, as of the last day of the preceding Plan Year (the
"determination date"), any of the following conditions exist:
<PAGE>
26
(a) If the Top-Heavy Ratio for this Plan exceeds sixty percent (60%)
and this Plan is not part of any required aggregation group or permissive
aggregation group of plans;
(b) If this Plan is a part of a required aggregation group of plans
(but which is not part of a permissive aggregation group) and the Top-Heavy
Ratio for the group of plans exceeds sixty percent (60%); or
(c) If this Plan is a part of a required aggregation group of plans and
part of a permissive aggregation group and the Top-Heavy Ratio for the
permissive aggregation group exceeds sixty percent (60%).
In determining whether the Plan is top heavy for Plan Years commencing
after December 31, 1984, the Account balance of a Participant who has not
performed an Hour of Service for the Employer at any time during the
five-consecutive-year period ending on the determination date shall be excluded
from the calculation of the Top Heavy Ratio.
9.4 Minimum Contribution -- For each Plan Year with respect to which
the Plan is top heavy, the minimum amount allocated under the Plan for the
benefit of each Participant who is a Non-Key Employee and who is otherwise
eligible for such an allocation shall be the lesser of:
(a) three percent (3%) of the Non-Key Participant's compensation
(within the meaning of Section 415 of the Code) for the Plan Year, or
(b) the Non-Key Participant's compensation (as defined in Section 415
of the Code) times a percentage equal to the largest percentage of such
compensation (not exceeding $200,000, $150,000 for Plan Years beginning on or
after January 1, 1994) allocated to any Key Employee for the Plan Year under
this Plan and all other defined contribution plans in the same required
aggregation group. This clause (b) shall not apply to any plan required to be
included in an aggregation group if such plan enables a defined benefit plan
required to be included in such group to meet the requirements of Section
401(a)(4) or Section 410 of the Code.
This paragraph shall not apply to a Participant covered under a qualified
defined benefit plan maintained by the Employer if the Participant's vested
benefit thereunder satisfies the requirements of Section 416(c) of the Code.
Notwithstanding any other language herein, a Non-Key Eligible Employee may not
fail to receive a defined contribution minimum allocation because either (1)
said Eligible Employee was excluded from participation (or accrues no benefit)
merely because the Employee's compensation is less than the stated amount, or
(2) the Employee is excluded from participation (or accrues no benefit) merely
because of a failure to make Elective Deferrals.
9.5 Accelerated Vesting --
(a) For each Plan Year during which the Plan is top heavy, a vesting
schedule which complies with the requirements of Section 416(b)(1)(a) of the
Code will be placed in effect. Each Participant in a Period of Service during a
Plan Year in which the Plan is top-heavy will be entitled to a Nonforfeitable
right to one hundred percent (100%) of the pension benefit accrued from Employer
contributions provided said Participant has completed a Period of Service with
the Employer of at least three (3) years.
<PAGE>
27
(b) In the event that an accelerated vesting schedule must be placed in
effect in accordance with subparagraph (a) of this Section 9.5 and the Plan is
later determined not to be top heavy, no vesting schedule change shall be made
which shall have the effect of providing a benefit to a Participant less than
the accrued cumulative benefit to which the Participant was otherwise entitled
as of the date of said vesting schedule change pursuant to said subparagraph
(a).
ARTICLE X - THE TRUST FUND
10.1 Trust Agreement -- During the period in which this Plan remains in
existence, the Employer or any successor thereto shall maintain in effect a
Trust Agreement with a corporate trustee as Trustee, to hold, invest, and
distribute the Trust Fund in accordance with the terms of such Trust Agreement.
10.2 Investment of Accounts -- The Trustee shall invest and reinvest
the Participant's accounts in investment options as defined in Section 4.1 as
directed by the Administrator or its delegate in writing. The Administrator
shall issue such directions in accordance with the investment options selected
by the Participants which shall remain in force until altered in writing in
accordance with Sections 4.2 and 4.3.
10.3 Expenses -- Expenses for the Plan and Trust shall be paid from
the Trust.
ARTICLE XI - ADMINISTRATION OF THE PLAN
11.1 General Administration -- The general administration of the Plan
shall be the responsibility of Raytheon Company (or any successor thereto) which
shall be the Administrator and Named Fiduciary for purposes of the Retirement
Act. The Company shall have the authority, in its sole discretion, to construe
the terms of the Plan and to make determinations as to eligibility for benefits
and as to other issues within the "Responsibilities of the Administrator"
described in Article XI, Section 11.2. All such determinations of the Company
shall be conclusive and binding on all persons.
11.2 Responsibilities of the Administrator -- The Administrator shall
assign responsibility for performance of all necessary administrative duties,
including the following:
(a) Determination of all questions which may arise under the Plan with
respect to eligibility for participation and administration of accounts,
including without limitation questions with respect to membership, vesting,
loans, withdrawals, accounting, status of accounts, stock ownership and voting
rights, and any other issue requiring interpretation or application of the Plan.
<PAGE>
28
(b) Reference of appropriate issues to the Offices of the Executive
Vice President - Chief Financial Officer, the Senior Vice President Treasurer,
the Director of Tax Affairs, the Vice President General Counsel, and the Vice
President - Human Resources, respectively, for advice and counsel.
(c) Establishment of procedures required by the Plan, such as
notification to Employees as to joining the Plan, selecting and changing
investment options, suspending deferrals, exercising voting rights in stock,
withdrawing and borrowing account balances, designation of beneficiaries,
election of method of distribution, and any other matters requiring a uniform
procedure.
(d) Submission of necessary amendments to supplement omissions
from the Plan or reconcile any inconsistency therein.
(e) Filing appropriate reports with the Government as required by law.
(f) Appointment of a Trustee or Trustees and investment managers.
(g) Review at appropriate intervals of the performance of the Trustee
and such investment managers as may have been designated.
(h) Appointment of such additional Fiduciaries as deemed necessary for
the effective administration of the Plan, such appointments to be by written
instrument.
11.3 Liability for Acts of Other Fiduciaries -- Each Fiduciary shall be
responsible only for the duties allocated or delegated to said Fiduciary, and
other Fiduciaries shall not be liable for any breach of fiduciary responsibility
with respect to any act or omission of any other Fiduciary unless:
(a) The Fiduciary knowingly participates in or knowingly attempts to
conceal the act or omission of such other Fiduciary and knows that such act or
omission constitutes a breach of fiduciary responsibility by the other
Fiduciary;
(b) The Fiduciary has knowledge of a breach of fiduciary responsibility
by the other Fiduciary and has not made reasonable efforts under the
circumstances to remedy the breach; or
(c) The Fiduciary's own breach of his specific fiduciary
responsibilities has enabled another Fiduciary to commit a breach. No Fiduciary
shall be liable for any acts or omissions which occur prior to his assumption of
Fiduciary status or after his termination from such status.
<PAGE>
29
11.4 Employment by Fiduciaries -- Any Fiduciary hereunder may employ,
with the written approval of the Administrator, one or more persons to render
service with regard to any responsibility which has been assigned to such
Fiduciary under the terms of the Plan including legal, tax, or investment
counsel and may delegate to one or more persons any administrative duties
(clerical or otherwise) hereunder.
11.5 Recordkeeping -- The Administrator shall keep or cause to be kept
any necessary data required for determining the account status of each
Participant. In compiling such information, the Administrator may rely upon its
employment records, including representations made by the Participant in the
employment application and subsequent documents submitted by the Participant to
the Employer. The Trustee shall be entitled to rely upon such information when
furnished by the Administrator or its delegate. Each Employee shall be required
to furnish the Administrator upon request and in such form as prescribed by the
Administrator, such personal information, affidavits and authorizations to
obtain information as the Administrator may deem appropriate for the proper
administration of the Plan, including but not limited to proof of the Employee's
date of birth and the date of birth of any person designated by a Participant as
a Beneficiary.
11.6 Claims Review Procedure -- The Administrator shall make all
determinations as to the right of any person to Accounts under the Plan. Any
such determination by the Administrator shall be made pursuant to the following
procedure:
Step 1. Claims with respect to an Account should be filed by a claimant
as soon as practicable after claimant knows or should know that a dispute has
arisen with respect to an Account, but at least thirty (30) days prior to the
claimant's actual retirement date or, if applicable, within sixty (60) days
after the death, Disability or Severance from Service of the Participant whose
account is at issue, by mailing a copy of the claim to the Benefits and Services
Department, Raytheon Company, 141 Spring Street, Lexington, Massachusetts 02173.
Step 2. In the event that a claim with respect to an Account is wholly
or partially denied by the Administrator, the Administrator shall, within ninety
(90) days following receipt of the claim, so advise the claimant in writing
setting forth: the specific reason or reasons for the denial; specific reference
to pertinent Plan provisions on which the denial is based; a description of any
additional material or information necessary for the claimant to perfect the
claim; an explanation as to why such material or information is necessary; and
an explanation of the Plan's claim review procedure.
Step 3. Within sixty (60) days following receipt of the denial of a
claim with respect to an Account, a claimant desiring to have the denial
appealed shall file a request for review with the Administrator by mailing a
copy thereof to the address shown in Step 1.
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30
Step 4. Within thirty (30) days following receipt of a request for
review, the Administrator shall provide the claimant a further opportunity to
present his or her position. At the Administrator's discretion, such
presentation may be through an oral or written presentation. Prior to such
presentation, the claimant shall be permitted the opportunity to review
pertinent documents and to submit issues and comments in writing. Within a
reasonable time following presentation of the claimant's position, which usually
should not exceed thirty (30) days, the Administrator shall inform the claimant
in writing of the decision on review setting forth the reasons for such decision
and citing pertinent provisions in the Plan.
The Administrator is the fiduciary to whom the Plan grants full
discretion, with the advice of counsel, to interpret the Plan; to determine
whether a claimant is eligible for benefits; to decide the amount, form and
timing of benefits; and to resolve any other matter under the Plan which is
raised by a claimant or identified by the Administrator. All questions arising
from or in connection with the provisions of the Plan and its administration,
not herein provided to be determined by the Board of Directors, shall be
determined by the Administrator, and any determination so made shall be
conclusive and binding upon all persons affected thereby.
11.7 Indemnification of Directors and Employees -- The Companies shall
indemnify by insurance or otherwise any Fiduciary who is a director, officer or
employee of the Employer, his heirs and legal representatives, against all
liability and reasonable expense, including counsel fees, amounts paid in
settlement and amounts of judgments, fines or penalties, incurred or imposed
upon him in connection with any claim, action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of acts or omissions
in his capacity as a Fiduciary hereunder, provided that such act or omission is
not the result of gross negligence or willful misconduct. The Companies may
indemnify other Fiduciaries, their heirs and legal representatives, under the
circumstances, and subject to the limitations set forth in the preceding
sentence, if such indemnification is determined by the Board of Directors to be
in the best interests of the Companies.
11.8 Immunity from Liability -- Except to the extent that Section
410(a) of the Retirement Act prohibits the granting of immunity to Fiduciaries
from liability for any responsibility, obligation, or duty imposed under Title
I, Subtitle B, Part 4 of said Act, an officer, employee, member of the Board of
Directors of the Employer or other person assigned responsibility under this
Plan shall be immune from any liability for any action or failure to act except
such action or failure to act which results from said officer's, Employee's,
Participant's or other person's own gross negligence or willful misconduct.
<PAGE>
31
ARTICLE XII - AMENDMENT OR TERMINATION OF THE PLAN
12.1 Right to Amend or Terminate Plan -- Each of the Companies reserves
the right at any time or times, by action of its Board of Directors, to modify,
amend or terminate the Plan in whole or in part as to its Employees, in which
event a certified copy of the resolution of the Board of Directors, authorizing
such modification, amendment or termination shall be delivered to the Trustee
and to the other Companies whose Employees are covered by this Plan, provided,
however, no amendment to the Plan shall be made which shall:
(a) deprive any Participant of amounts allocated to his Account
prior to the date of the amendment;
(b) except as provided in Section 3.11, make it possible for any part
of the corpus or income of the Trust Fund to be used for or diverted to purposes
other than the exclusive benefit of the Participants or their beneficiaries
prior to the satisfaction of all liabilities with respect to such Participant or
their Beneficiaries;
(c) modify the vesting schedule and deprive a Participant of his
Nonforfeitable rights to amounts allocated to his account prior to the date of
the amendment. Further, if the vesting schedule of the Plan is amended, or the
Plan is amended to directly or indirectly affect a Nonforfeitable percentage of
a Participant's Account, each Participant with a Period of Service of at least
three years may elect, within a reasonable period after the adoption of the
amendment to have his nonforfeitable percentage computed under the Plan without
regard to such amendment. The period during which the election may be made shall
commence with the date the amendment is adopted or the change made and shall end
on the latest of:
(i) 60 days after the amendment is adopted;
(ii) 60 days after the amendment becomes effective, or
(iii) 60 days after the Participant is issued written notice of the
amendment;
(d) increase the duties of liabilities of the Trustee without its
consent.
Notwithstanding the foregoing provisions of this Section or any other provisions
of this Plan, any modification or amendment of the Plan may be made
retroactively if necessary or appropriate to conform the Plan with, or to
satisfy the conditions of, the Retirement Act, the Code, or any other law,
governmental regulation or ruling.
Any termination, modification or amendment of the Plan shall be subject
to approval by the Board of Directors of the Company.
12.2 Maintenance of Plan -- The Employer has established the Plan with
the bona fide intention and expectation that it will be able to make its
contributions indefinitely, but the Employer is not and shall not be under any
obligation or liability whatsoever to continue its contributions or to maintain
the Plan for any given length of time.
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32
12.3 Termination of Plan and Trust -- The Plan and Trust hereby created
shall terminate upon the occurrence of any of the following events:
(a) Delivery to the Trustee of a notice of termination executed by
the Employer specifying the date as of which the Plan and Trust shall terminate;
(b) Adjudication of the Employer as bankrupt or general assignment by
the Employer to or for the benefit of creditors or dissolution of the Employer;
In the event of the complete termination of this Plan or the complete
discontinuance of Matching Contributions under it (but a rescission under
Section 13.2 for failure to qualify initially is not such a termination or
complete discontinuance), the rights of each Participant to the amounts then
credited to his or her Account shall be Nonforfeitable. In the event of the
partial termination of this Plan, the rights of each Employee (as to whom the
Plan is considered terminated) to the amounts then credited to his or her
Account, shall be Nonforfeitable. Whether or not there is a complete or partial
termination of this Plan shall be determined under the regulations promulgated
pursuant to the Internal Revenue Code. To the extent this paragraph is
inconsistent with any provisions contained elsewhere in this Plan or in the
Trust which forms a part of this Plan, this paragraph shall govern. Upon such
termination of the Plan and Trust, after payment of all expenses and
proportional adjustment of accounts to reflect such expenses, fund losses or
profits, and reallocations to the date of termination, each Participant or
former Participant shall, subject to the requirements of Section 401(k)(10) of
the Code and Reg. ss. 1.401(k)-1(d)(3), be entitled to receive any amounts then
credited to his or her Account in the Trust Fund. The Trustee may make payments
in cash or, to the extent permitted by Section 6.6, in stock.
ARTICLE XIII - ADDITIONAL PROVISIONS
13.1 Effect of Merger, Consolidation or Transfer -- In the event of any
merger or consolidation with or transfer of assets or liabilities to any other
plan or to this Plan, each Participant of the Plan shall be entitled to a
benefit immediately after the merger, consolidation or transfer, which is equal
to or greater than the benefit he or she would have been entitled to receive
immediately before the merger, consolidation or transfer (if the Plan had been
terminated).
13.2 Necessity of Initial Qualification -- This Plan is established
with the intent that it shall qualify under Sections 401(a) and 401(k) of the
Code as that section exists at the time the Plan is established. If the Internal
Revenue Service determines that the Plan initially fails to meet those
requirements, then within thirty (30) days after the date of such determination
all of the vested assets of the Trust Fund held for the benefit of Participants
and their beneficiaries shall be distributed equitably among the contributors to
the Plan in proportion to their contributions, and the Plan shall be considered
to be rescinded and of no force or effect, unless such inadequacy is removed by
a retroactive amendment pursuant to the Code. Any nonvested Matching
Contributions and earnings attributable thereto shall be returned to the
Companies.
<PAGE>
33
13.3 Limitation of Assignment -- No account under the Plan shall be
subject in any manner to attachment, anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, or the vesting of rights in any
person by operation of law or otherwise except as provided under this Plan,
including but not limited to the Trustee or Receiver in Bankruptcy, and any
attempt so to anticipate, alienate, sell, transfer, assign, encumber or charge
the same shall be void, nor shall any such benefit be in any way liable for or
subject to the debts, contracts, liabilities, engagements or torts of any person
entitled to such benefit. If any Participant is adjudicated bankrupt, or
attempts to anticipate, alienate, sell, transfer, assign, pledge, encumber or
charge any benefit under the Plan, then such benefit shall, in the discretion of
the Administrator, cease and terminate and in that event the Trustee shall hold
or apply the same or any part thereof to or for the benefit of such Participant
in such manner as the Administrator may direct.
Notwithstanding the foregoing, the Administrator is authorized to
comply with a domestic relations order determined by it to be a qualified
domestic relations order as defined in Section 414(p) of the Code. A
distribution may be made to an alternate payee under a qualified domestic
relations order in the form of a lump sum payment at the time specified in such
order, regardless of any restrictions on the commencement of the distribution
that then may apply to the Participant to whom the order relates.
13.4 Limitation of Rights of Employees -- This Plan is strictly a
voluntary undertaking on the part of the Companies and shall not be deemed to
constitute a contract between any of the Companies and any Employee, or to be a
consideration for, or an inducement to, or a condition of the employment of any
Employee. Nothing contained in the Plan shall be deemed to give any Employee the
right to be retained in the service of any of the Companies or shall interfere
with the right of any of the Companies to discharge or otherwise terminate the
employment of any Employee of the Company at any time. No Employee shall be
entitled to any right or claim hereunder except to the extent such right is
specifically fixed under the terms of the Plan.
13.5 Construction -- The Plan shall be construed, regulated, and
administered under the laws of the Commonwealth of Massachusetts, except to the
extent that the Retirement Act otherwise requires. In the event that any
provision of this Plan is inconsistent with any provision in the Retirement Act,
the provision in the Retirement Act shall be deemed to be controlling.
<PAGE>
34
13.6 Transfer of Assets from Raytheon Employee Savings and Investment
Plan -- Effective as of December 5, 1994, the account balances of those
participants under the Raytheon Employee Savings and Investment Plan who are
employed by Amana Refrigeration, Inc. in the unit represented by Local 2385,
International Association of Machinists and Aerospace Workers, at Amana's plant
in Fayetteville, Tennessee (the "Transferred Accounts") shall be transferred
into this Plan. Assets equal to the Transferred Accounts shall be transferred
from the Raytheon Employee Savings and Investment Plan to the Trustee, such
transfer to be effective as of December 5, 1994. Amounts held in the various
investment accounts under the Raytheon Employee Savings and Investment Plan and
Trust shall be transferred to the investment accounts under the Trust in
accordance with procedures established by the Administrator. Upon such transfer,
the assets transferred from the Raytheon Employee Savings and Investment Plan
shall become assets of this Plan for all purposes hereunder, effective as of
December 5, 1994, and this Plan shall assume all the liabilities of the Raytheon
Employee Savings and Investment Plan for the Transferred Accounts, and benefits
shall thereafter be allocated and paid pursuant to the provisions of this Plan.
All participants in the Raytheon Employee Savings and Investment Plan whose
accounts are transferred to this Plan shall remain fully vested in their
accounts which are transferred to this Plan. All withdrawal and distribution
options under the Raytheon Employee Savings and Investment Plan shall be made
available under this Plan with respect to the Transferred Accounts to the extent
required by Section 411(d)(6) of the Code.
ARTICLE XIV - DEFINITIONS
The following terms have the meaning specified below unless the context
indicates otherwise:
14.1 "Account" means the entire interest of a Participant in the Trust
Fund. A Participant's Account shall consist of an Employee Account and a
Matching Contribution Account.
14.2 "Administrator" means Raytheon Company.
14.3 "Affiliate" means a trade or business which together with any of
the Companies is a member of (i) a controlled group of corporations within the
meaning of Section 414(b) of the Code; (ii) a group of trades or businesses
(whether or not incorporated) under common control as defined in Section 414(c)
of the Code, or (iii) an affiliated service group as defined in Section 414(m)
of the Code, or which is an entity otherwise required to be aggregated with the
Companies pursuant to Section 414(o) of the Code. For purposes of Article VIII,
the determination of controlled groups of corporations and trades or businesses
under common control shall be made after taking into account the modification
required under Section 415(h) of the Code. This section shall be effective as of
January 1, 1987.
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35
14.4 "Authorized Leave of Absence" means an absence approved by the
Companies on a uniform and nondiscriminatory basis not exceeding one (1) year
for any of the following reasons: illness of Employee or relative, death of
relative, education of Employee, or personal or family business of an
extraordinary nature, provided in each case that the Employee returns to the
service of the Companies within the time period specified by the Companies.
14.5 "Authorized Military Leave of Absence" means any absence due to
service in the Armed Forces of the United States, upon completion of which the
Employee is entitled under any applicable Federal law to reemployment at the
termination of such military service, provided that he returns to the service of
the Companies within the period provided for by such applicable Federal law or
such further period as may be established by the Administrator. As used in this
paragraph, the term "Armed Forces of the United States" excludes the Merchant
Marine.
14.6 "Beneficiary" means the person designated by the Participant to
receive the value of his Account in the event of his death; provided, however,
that if a Participant with a spouse designates a Beneficiary other than his
spouse, said designation shall not take effect unless the spouse consents in
writing to such designation and said spousal consent acknowledges the effect of
said designation and is witnessed by a representative of the Plan or a notary
public. Said spousal consent shall be effective only with respect to the spouse
granting such consent, and shall not be required if the Participant can
establish that there is no spouse, that the spouse cannot be located, or that
other conditions exist as may be prescribed by regulations issued by the
Secretary of the Treasury. If there is no Beneficiary designated by the
Participant or surviving at the death of the Participant, payment of his Account
shall be made in accordance with Section 6.6. Subject to the foregoing, a
Participant may designate a new beneficiary at any time by filing with the
Administrator a written request for such change on a form prescribed by the
Administrator. Such change shall become effective only upon receipt of the form
by the Administrator, but upon such receipt of the change shall relate back to
and take effect as of the date the Participant signed such request, whether or
not the Participant is living at the time of such receipt, provided, however,
that neither the Trustee nor the Administrator shall be liable by reason of any
payment of the Participant's Account made before receipt of such form.
14.7 "Board of Directors" means the Board of Directors of Raytheon
Company.
14.8 "Business Day" means a day on which Fidelity is open for
general business.
14.9 "Code" means the Internal Revenue Code of 1986, as amended.
14.10 "Company" means Raytheon Company, but shall not include a
Division, Operation, payroll or similar cohesive group of Raytheon Company
excluded by the Board of Directors of Raytheon Company.
<PAGE>
36
14.11 "Companies" means the Company and any Subsidiary of the Company
which elects through an authorized officer to participate in the Plan on account
of its Employees, provided that participation in the Plan by such a Subsidiary
is approved by the Board of Directors of the Company, or an officer to whom
authority to approve participation by a Subsidiary is delegated by the Board of
Directors, but shall not include any Division, Operation or similar cohesive
group of a participating Subsidiary excluded by the Board of Directors of the
Subsidiary and the Board of Directors of the Company.
14.12 "Covered Hourly Payroll" means a payroll consisting of hourly
payroll Employees in the following bargaining units: production and maintenance
Employees employed at Speed Queen plants in Ripon and Omro, Wisconsin,
represented by Local 1327, United Steelworkers of America; production and
maintenance Employees employed at the Company's Eastern Massachusetts plants in
the unit represented by Local 1505, International Brotherhood of Electrical
Workers; production and maintenance Employees employed at the Company's Oxnard,
California, plant in the unit represented by Local 40, International Brotherhood
of Electrical Workers; Employees employed in machinist and related occupations
at the Company's Eastern Massachusetts plants in the unit represented by Lodge
1836, International Association of Machinists and Aerospace Workers; Employees
employed in machinist and related occupations at the Company's Portsmouth, Rhode
Island, plant in the unit represented by Lodge 587, International Association of
Machinists and Aerospace Workers; Employees employed as guards at the Company's
Eastern Massachusetts and New Hampshire plants in the unit represented by the
Raytheon Guards Association, and at the Company's Quincy, Massachusetts, plant
in the unit represented by Local 84, International Union of Police and
Protection Employees, Independent Watchmen's Association; Employees employed in
the Warehouseperson classification at Raytheon Marine Company's facility in
Seattle, Washington, represented by Driver Sales & Warehouse Union No. 117,
International Brotherhood of Teamsters; Employees employed at Amana
Refrigeration, Inc.'s Teterboro, New Jersey, facility in the unit represented by
Local 1518, International Brotherhood of Teamsters; Employees employed at Amana
Refrigeration, Inc.'s Amana, Iowa, facility in the unit represented by Local
1526, International Association of Machinists and Aerospace Workers; and
Employees employed on the hourly payroll at Amana Refrigeration Inc.'s Florence,
South Carolina, facility.
14.13 "Disability" means that the Participant is totally and
permanently disabled by bodily injury or disease so as to be prevented from
engaging in any occupation for compensation or profit. The determination of
disability shall be made by the Administrator with the aid of competent medical
advice. It shall be based on such evidence as the Administrator deems necessary
to establish disability or the continuation thereof.
14.14 "Early Retirement Date" means the first day of the month
subsequent to the earliest date on which the Participant has both attained age
55 and completed a Period of Service of ten (10) years.
14.15 "Elective Deferral" means a voluntary reduction of Participant's
compensation in accordance with Section 2.2 hereof.
14.16 "Eligible Compensation" means the base pay, supervisory
differentials, shift premiums and sales commissions, excluding all other
earnings from any source. Effective for Plan Years beginning on or after January
1, 1989 and prior to December 31, 1993, in no event shall the amount of Eligible
Compensation taken into account under the Plan for any Plan Year exceed $200,000
(or such larger amount as the Secretary of the Treasury may determine for such
Plan Year under Section 401(a)(17) of the Code). Effective for Plan Years
beginning on or after January 1, 1994, in no event shall the amount of Eligible
Compensation taken into account under the Plan for any Plan Year exceed $150,000
(or such larger amount as the Secretary of the Treasury may determine for such
Plan Year under Section 401(a)(17) of the Code). For purposes of this limitation
only, in determining compensation the rules of Section 414(q)(6) of the Code
shall apply, except that in applying such rules, the term "family" shall include
only the spouse of the Participant and any lineal descendants of the Participant
who have not attained age 19 before the close of the Plan Year.
<PAGE>
37
14.17 "Eligible Employee" means any Employee on a Covered Hourly
Payroll of one of the Companies, excluding Employees in cooperative studies and
intern programs and, effective January 1, 1987, a person who is a Leased
Employee. No Employee may be an Eligible Employee under this Plan for any period
during which the Employee is an Eligible Employee under the Raytheon Savings and
Investment Plan.
14.18 "Employee" means any person performing compensated services for
the Employer who meets the definition of "Employee" for income tax withholding
purposes under Treas. Regs. 31.3401(c)-1 and any person who is a Leased
Employee. This section shall be effective as of January 1, 1987.
14.19 "Employee Account" means that portion of Participant's Account
which is attributable to Elective Deferrals, adjustments for withdrawals and
distributions, and the earnings and losses attributable thereto.
14.20 "Employer" means Raytheon Company and any Affiliate thereof.
14.21 "Employment Commencement Date" is the date on which the Employee
first performs an Hour of Service with the Employer.
14.22 "Enrollment Agreement" means a salary reduction agreement
pursuant to which an Eligible Employee voluntarily joins the Plan and authorizes
deferral of a portion of the Participant's Eligible Compensation.
14.23 "Fidelity" means Fidelity Investments, the recordkeeper for
the Plan.
14.24 "Fiduciary" means a named fiduciary and any other person or group
of persons who assumes a fiduciary responsibility within the meaning of the
Retirement Act under this Plan whether by expressed delegation or otherwise but
only with respect to the specific responsibilities of each for the
administration of the Plan and Trust Fund.
14.25 "Higher Paid Eligible Employee" means an individual described in
Section 414(q) of the Code, after giving effect to subsection (12) thereof, and
any regulation, notice or other guidance issued by the Internal Revenue Service
thereunder. The determination of whether an individual is a Higher Paid Eligible
Employee may be made by the Administrator on the basis of any elective provision
permitted under such regulation, notice or other guidance. In general, an
Employee will be considered a Higher Paid Eligible Employee if such individual:
(a) was a five percent owner as defined in Section 416(i)(1)(iii)
of the Code at any time during the current or preceding Plan Year;
<PAGE>
38
(b) received compensation in excess of $50,000 during the current or
preceding Plan Year (adjusted annually for increases in the cost of living in
accordance with Section 415(d) of the Code); or
(c) was at any time an officer within the meaning of Section 416(i) of
the Code during the preceding Plan Year, and who received compensation in the
current or preceding Plan Year greater than 50 percent of the dollar limitation
in effect under Section 415(b)(1)(A) of the Code for such Plan Year.
Notwithstanding the foregoing, no more than 50 or, if lesser, the greater of 3
employees or 10 percent of the Employees shall be treated as officers.
(d) An Employee who is not described in paragraph (b) or (c) above for
the preceding Plan Year shall not be treated as described in paragraph (b) or
(c) unless such Employee is one of the 100 Employees who receive the most
compensation from the Employer during the Plan Year.
(e) A former Employee shall be treated as a Higher Paid Eligible
Employee if such former Employee had a separation year prior to the Plan Year
and was a Higher Paid Eligible Employee for either (1) such Employee's
separation year or (2) any Plan Year ending on or after the Employee's 55th
birthday.
A separation year is the Plan Year in which the Employee separates from
service.
(f) Notwithstanding anything to the contrary in this Plan, Sections
414(b), (c), (m), (n), and (o) of the Code are applied prior to determining
whether an Employee is a High Paid Eligible Employee.
(g) "Non-Higher Paid Eligible Employee" shall mean an Employee who is
neither a Higher Paid Eligible Employee nor a family member (within the meaning
of Section 414(q)(6) of the Code).
(h) "Compensation" shall mean the Employee's wages which are required
to be reported on IRS Form W-2, increased by any Elective Deferrals made by the
Companies to the Plan on behalf of the Employee and any pre-tax elective
contributions made by the Companies which are excludible from the Employee's
income under Section 125 of the Code.
14.26 (a) "Hour of Service" means an hour with respect to which any
Employee is paid, or entitled to payment, for the performance of duties for the
Employer during the applicable computation period.
(b) "Hour of Service" shall include an hour for which the Employee is
entitled to credit under subparagraph (a) hereof as a result of employment:
(i) with a predecessor company substantially all of the assets of which
have been acquired by the Employer, provided that where only a portion of the
operations of a company have been acquired, only service with said acquired
portion prior to the acquisition will be included and that the Employee was
employed by said predecessor company at the time of acquisition; or
<PAGE>
39
(ii) with a Division, Operation or similar cohesive group of the
Employer excluded from participation in the Plan.
(c) To the extent applicable, the rules set forth in 29 CFR Sections
2530.200b-2(b) and (c) for computing an "Hour of Service" are incorporated
herein by reference.
14.27 "Layoff" means an involuntary interruption of service due to
reduction in the cost of living in accordance with Section of work force with or
without the possibility of recall to employment when conditions warrant.
14.28 "Leased Employee" means any person (other than an Employee) who,
pursuant to an agreement between the Employer and any other person, has
performed services for the Employer (or any related person as provided in
Section 414(n)(6) of the Code) on a substantially full time basis for a period
of at least one year and such services are of the type historically performed by
employees in the business field of the Employer. Leased Employees are not
eligible to participate in the Plan. Notwithstanding the foregoing, if such
"Leased Employees" constitute less than 20% of the nonhighly compensated
workforce of the Employer within the meaning of Section 414(n)(5)(C)(ii) of the
Code, the term "Employee" shall not include Leased Employees covered by a plan
described in Section 414(n)(5) of the Code. This section shall be effective as
of January 1, 1987.
14.29 "Limitation Year" means the calendar year or any other
12-consecutive-month period adopted for all qualified deferred compensation
plans of the Company pursuant to a written resolution adopted by the Company.
14.30 "Matching Contribution" means contribution made to the Trust
in accordance with Section 3.7 hereof.
14.31 "Matching Contribution Account" means that portion of
Participant's Account which is attributable to Matching Contributions by the
Companies, adjustments for withdrawals and distributions, and the earnings and
losses attributable thereto.
14.32 "Net Annual Profits" means the current earnings of the Companies
for the Plan Year determined in accordance with generally accepted accounting
principles before federal and local income taxes and before contributions to
this Plan or any other qualified plan.
14.33 "Net Profits" means the accumulated earnings of the Companies at
the end of the Plan Year determined in accordance with generally accepted
accounting principles. For the purposes hereof "accumulated earnings at the end
of the Plan Year" shall include Net Annual Profits for such Plan Year calculated
before any deduction is taken for depreciation, if any.
<PAGE>
40
14.34 "Nonforfeitable" means an unconditional right to an Account
balance or portion thereof determined as of the applicable date of determination
under this Plan.
14.35 "Normal Retirement Age" means the Participant's sixty-fifth
(65th) birthday.
14.36 "Participant" means an individual who is enrolled in the Plan
pursuant to Article III and has not withdrawn the entire amount of his or her
Account.
14.37 "Pay Period" means a scheduled period for payment of wages or
salaries.
14.38 "Period of Participation" means that portion of a Period of
Service during which the Eligible Employee was a Participant, and had an
Employee Account in the Plan. For the purpose of determining a Period of
Participation, participation in the Raytheon Savings and Investment Plan and the
Raytheon Employee Savings and Investment Plan shall be considered as
participation in this Plan.
14.39 "Period of Service" means the period of time beginning on the
Employee's Employment Commencement Date or Reemployment Commencement Date,
whichever is applicable, and ending on the Employee's Severance from Service
Date.
14.40 "Period of Severance" means the period of time beginning on the
Employee's Severance from Service Date and ending on the Employee's Reemployment
Commencement Date.
14.41 "Plan" means the Raytheon Savings and Investment Plan for
Specified Hourly Payroll Employees as amended from time to time.
14.42 "Plan Year" means a calendar year, or a portion thereof occurring
prior to the termination of the Plan.
14.43 "Reemployment Commencement Date" means the first date on which
the Employee performs an Hour of Service following a Period of Severance which
is excluded under Section 5.3 in determining whether a Participant has a
Nonforfeitable right to his or her Matching Contribution Account.
14.44 "Retirement" means a Severance from Service when the Participant
has either attained age 55 and completed a Period of Service of at least ten
(10) years or has attained Normal Retirement Age.
14.45 "Retirement Act" means the Employee Retirement Income Security
Act of 1974, including any amendments thereto.
<PAGE>
41
14.46 "Rollover Contribution Account" means that portion of a
Participant's Account which is attributable to rollover contributions received
pursuant to Section 3.10, adjustments for withdrawals and distributions, and the
earnings and losses attributable thereto.
14.47 "Salaried Payrolls" means the nonexempt salaried and the exempt
salaried payrolls which are processed in the United States.
"Severance from Service" means the termination of employment by reason of quit,
Retirement, discharge, death or failure to return from Layoff, Authorized Leave
of Absence, Authorized Military Leave of Absence or Disability.
14.49 "Severance from Service Date" means the earlier of:
(a) the date on which an Employee quits, retires, is discharged,
or dies; or
(b) except as provided in paragraphs (c) and (d) hereof, the first
anniversary of the first date of a period during which an Employee is absent for
any reason other than quit, retirement, discharge or death, provided that, on an
equitable and uniform basis, the Administrator may determine that, in the case
of a Layoff as the result of a permanent plant closing, the Administrator may
designate the date of Layoff or other appropriate date prior to the first
anniversary of the first date of absence as the Severance From Service Date; or
(c) in the case of an Authorized Military Leave of Absence from which
the Employee does not return prior to expiration of recall rights, "Severance
from Service Date" means the first day of absence because of the leave; or
(d) in the case of an absence due to Disability, "Severance from
Service Date" means the earlier of the first anniversary of the first day of
absence because of the Disability or the date of termination of the Disability;
or
(e) in the case of an Employee who is discharged or quits (i) by reason
of the pregnancy of the Employee, (ii) by reason of the birth of a child to the
Employee, (iii) by reason of the placement of a child with the Employee in
connection with the adoption of such child by the Employee or (iv) for purposes
of caring for such child for a period beginning immediately following such birth
or placement, "Severance from Service Date," for the sole purpose of determining
the length of a Period of Service, shall mean the first anniversary of the quit
or discharge; or
(f) in the case of an Employee who is absent from service beyond the
first anniversary of the first day of absence (i) by reason of the pregnancy of
the Employee, (ii) by reason of the birth of a child to the Employee, (iii) by
reason of the placement of a child with the Employee in connection with the
adoption of such child by the Employee or (iv) for purposes of caring for such
child for a period beginning immediately following such birth or placement, the
Severance from Service Date shall be the second anniversary of the first day of
such absence. The period between the first and second anniversaries of the first
day of absence is neither a Period of Service nor a Period of Severance.
<PAGE>
42
14.50 "Subsidiary" means any corporation designated by the Board of
Directors of Raytheon Company as a Subsidiary, provided that for the purposes of
the Plan no corporation shall be considered a Subsidiary during any period when
less than fifty percent (50%) of its outstanding voting stock is beneficially
owned by the Company.
14.51 "Surviving Spouse" means a lawful spouse surviving the
Participant as of the date of Participant's death.
14.52 "Trust Agreement" means the agreement between the Company and the
Trustee, and any successor agreement made and entered into for the establishment
of a trust fund of all contributions which may be made to the Trustee under the
Plan.
14.53 "Trustee" means the Trustee and any successor trustees under
the Trust Agreement.
14.54 "Trust Fund" means the cash, securities, and other property held
by the Trustee for the purposes of the Plan.
14.55 "Valuation Date" means each day the New York Stock Exchange is
open for business.
14.56 Words used in either the masculine or feminine gender shall be
read and construed so as to apply to both genders where the context so warrants.
Words used in the singular shall be read and construed in the plural where they
so apply.
<PAGE>
43
APPENDIX A
EFFECTIVE DATES AND AGE REQUIREMENTS
FOR LOAN PROVISIONS
Effective Date of Required Age for
Unit Loan Provisions Loan Eligibility
Local 1327, United
Steelworkers of America January 1, 1987 Less than age 59 1/2
Local 1836, International Association
of Machinists and Aerospace Workers January 1, 1987 Less than age 59 1/2
Local 1505, International Brotherhood
of Electrical Workers March 1, 1989 None
Local 587, International Association March 1, 1989 None
of Machinists and Aerospace Workers
Local 40, International Brotherhood April 1, 1989 None
of Electrical Workers
Raytheon Guards Association May 1, 1989 None
Local 84, International Union of May 1, 1989 None
Police and Protection Employees,
Independent Watchmen's Association
Driver Sales & Warehouse May 1, 1990 None
Union No. 117
Local 284, International Brotherhood of Teamsters Nov. 1, 1995
<PAGE>
1
EXHIBIT 99.3
RAYTHEON EMPLOYEE SAVINGS AND INVESTMENT PLAN
FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
The supplemental schedules required to accompany the Plan's Form 5500 are not
required since the Plan's assets are held in a Master Trust. Accordingly,
detailed financial information, including the supplemental schedules, must be
filed separately with the Department of Labor by the plan administrator.
<PAGE>
2
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Raytheon Company:
We have audited the accompanying statements of net assets available for plan
benefits of the Raytheon Employee Savings and Investment Plan as of December 31,
1995 and 1994, and the related statements of changes in net assets available for
plan benefits for each of the three years in the period ended December 31, 1995.
These financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the
Raytheon Employee Savings and Investment Plan as of December 31, 1995 and 1994,
and the changes in net assets available for plan benefits for each of the three
years in the period ended December 31, 1995 in conformity with generally
accepted accounting principles.
Boston, Massachusetts
May 31, 1996
<PAGE>
3
RAYTHEON EMPLOYEE SAVINGS AND INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
as of December 31, 1995 and 1994
1995 1994
---- ----
Assets:
Investments at contract value (Note E) $3,459,749 $3,266,499
Investments, at fair value (Notes B, F and I) 9,537,545 6,336,569
Receivables:
Accrued investment income 228 122
Employee deferrals 8,405 36,445
Employer contributions 602 -
Cash and cash equivalents 79,080 81,365
---------- -----------
Total assets 13,085,609 9,721,000
---------- -----------
Liabilities:
Payable for outstanding purchases - 3,551
Accrued expenses 546 26,561
---------- -----------
Total liabilities 546 30,112
---------- -----------
Net assets available for plan benefits $13,085,063 $9,690,888
---------- -----------
The accompanying notes are an integral part of the financial statements.
<PAGE>
4
RAYTHEON EMPLOYEE SAVINGS AND INVESTMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS
for the years ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- -----
<S> <C> <C> <C>
Additions to net assets attributable to:
Investment income (Notes B, E and I):
Change in net appreciation (depreciation)
of investments $ 1,655,273 $ (38,996) $ 574,501
Interest 219,730 140,757 180,700
Dividends 159,836 64,011 68,660
Capital gains distributions 83,196 67,730 1,937
----------- ----------- -----------
2,118,035 233,502 825,798
----------- ----------- -----------
Contributions and deferrals:
Employee deferrals 3,152,973 1,958,742 1,562,048
Employer contributions 719 - -
Transfers in (Notes A and G) - 3,525,480 2,395,136
Other additions, net (Note H) - 1,535,667 -
----------- ----------- -----------
3,153,692 7,019,889 3,957,184
----------- ----------- -----------
Total additions 5,271,727 7,253,391 4,782,982
=========== ============ ===========
Deductions from net assets attributable to:
Benefits to and withdrawals by participants 770,283 177,807 220,371
Administrative expenses 5,430 4,898 14,230
Transfers out (Notes A and G) - - 14,669,380
Other deductions, net (Note H) 1,101,839 - -
----------- ----------- -----------
Total deductions 1,877,552 182,705 14,903,981
----------- ----------- -----------
Increase (decrease) in net assets 3,394,175 7,070,686 (10,120,999)
----------- ----------- -----------
Net assets, beginning of year 9,690,888 2,620,202 12,741,201
----------- ----------- -----------
Net assets, end of year $13,085,063 $9,690,888 $ 2,620,202
=========== =========== ===========
</TABLE>
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"), formerly The Badger Company, Inc.
Savings and Investment Plan provides only general information.
Participants should refer to the Plan agreement for a complete
description of the Plan's provisions. The Plan is a defined
contribution plan. Through May 12, 1993, the Plan covered certain
employees of Raytheon Engineers and Constructors, Inc., a wholly-owned
subsidiary of Raytheon Company. On that day, the accounts of all
participants in the plan were transferred to the Raytheon Savings and
Investment Plan. The Plan was inactive until October 1, 1993.
Effective October 1, 1993 and November 1, 1993, the Plan was amended
to cover the employees of the Raytheon Support Services Company and
the Range Systems Engineer Support Company, respectively, wholly-owned
subsidiaries of Raytheon Company (the "Company"). On those days, the
accounts of all these participants were transferred from the Raytheon
Subsidiary Savings and Investment Plan into the Plan. Additional plan
transfers became effective in 1994 and 1995 (Note G). To participate
in the Plan, eligible employees must have three months of service and
may enter the Plan only on the first day of each month. The purpose of
the Plan is to provide participants with a tax-effective means of
meeting both short and long-term investment objectives. The Plan is
intended to be a "qualified cash or deferred arrangement" under
Sections 401(a) and 401(k) of the Internal Revenue Code (the "Code").
The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA). The total number of participants
in the Plan as of December 31, 1995 and 1994 were 1,393 and 1,278,
respectively. Participants by fund were as follows as of December 31,
1995:
Guaranteed Income Fund 663
Equity Fund 649
Raytheon Common Stock Fund 722
Stock Index Fund 450
Balanced Fund 475
Effective July 31, 1992, the Plan's investments were combined with
the investments of other similar defined contribution plans of
Raytheon Company and Subsidiaries Consolidated 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.
<PAGE>
6
RAYTHEON EMPLOYEE SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
Contributions and Deferrals
Eligible employees were allowed to defer to the Plan up to 17% of their
salaries effective January 1, 1994. The Company did not make matching
contributions during fiscal years 1992 through 1995. However, beginning
in 1995, the Company did make contributions to certain accounts based
on specific employee agreements. As of December 31, 1995, the annual
employee deferral cannot exceed $9,240. Rollover contributions from other
qualified plans are accepted by the Plan. Participants may invest their
deferrals in increments of 1% in any combination of five funds: (a) a
Guaranteed Income Fund under which assets are invested primarily in
contracts providing for fixed rates of interest for specified periods
of time, (b) an Equity Fund which invests in shares of a mutual fund
which consists primarily of income-producing equity securities, (c) a
Raytheon Common Stock Fund which invests in shares of Raytheon Company
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, and (e) a Balanced Fund which invests in shares of a mutual
fund which consists primarily of equity securities, bonds and money market
instruments. Dividends and distributions from investments of the Raytheon
Common Stock Fund, the Equity Fund and the Balanced 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
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.
Benefits and Withdrawals
A participant may withdraw all or part of deferrals 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 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 to January
of the following year.
Loans to Participants
A participant may borrow against a portion of the balance in the
participant's account, subject to certain restrictions. The maximum
amount of a loan is the lesser of one-half (1/2) 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
<PAGE>
7
RAYTHEON EMPLOYEE SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
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 Plan's investment contracts are valued at their contract value,
defined as net employee deferrals plus interest earned on the underlying
investments at contracted rates, which 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.
Security transactions are recorded on trade date. Except for its
investment contracts (Note E), the Plan's investments are held by bank-
administered trust funds. Payables for outstanding security transactions
represent trades which have occurred but have not yet settled.
The Plan presents in the statement of changes in net assets the net
appreciation (depreciation) in the fair value of its investments which
consists of the realized gains or losses and the unrealized appreciation
(depreciation) on those investments.
Dividend income is recorded on the ex-dividend date. Income from other
investments is recorded as earned on an accrual basis.
Benefits are recorded when paid.
Certain items in the 1994 financial statements have been reclassified to
conform to the 1995 presentation.
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and the disclosure of contingent assets and liabilities as of December
31, 1995, and 1994, as well as the reported amounts of revenues and
expenses during the three years ended December 31, 1995. Actual results
could differ from the estimates included in the financial statements.
<PAGE>
8
RAYTHEON EMPLOYEE SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
C. Federal Income Tax Status:
-------------------------
The Plan obtained its latest determination letter in June 1995, in which
the Internal Revenue Service stated that the Plan, as submitted, was in
compliance with the applicable requirements of the Internal Revenue
Code. The Plan has been amended since receiving the determination
letter. However, the plan administrator and the Plan's legal counsel
believe that the Plan is currently designed and being operated in
compliance with the applicable requirements of the Internal Revenue
Code. Therefore, no provision for income taxes has been included in the
Plan's financial statements.
D. Plan Termination:
----------------
Although it has not expressed any intention to do so, the Company
reserves the right under the Plan at any time or times to 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, the participant will become 100% vested in their account
balances including Company contributions.
E. Investment Contracts:
--------------------
The Plan holds three collateralized fixed income investment portfolios
(with no expiration date), two of which are managed by insurance
companies and one of which is managed by an investment management firm.
The credited interest rates are adjusted semiannually to reflect the
experienced and anticipated yields to be earned on such investments,
based on their book value. The average yield and credited interest rates
were as follows:
Average Credited
Yield Interest Rate
------- -------------
For the year ended 12/31/95:
Banker's Trust 6.67% 6.84%
Metropolitan Life Insurance Company 6.46% 6.61%
Prudential Asset Management Company 6.88% 6.86%
For the year ended 12/31/94:
Banker's Trust 6.19% 6.37%
Metropolitan Life Insurance Company 6.26% 6.22%
Prudential Asset Management Company 6.91% 6.89%
The contract values are subject to limitations in certain situations
including large work force reductions and Plan termination.
<PAGE>
9
RAYTHEON EMPLOYEE SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
F. Related Party Transactions:
--------------------------
In accordance with the provisions of the Plan, Fidelity Management Trust
Co. (the "Trustee") acts as the Plan's agent for purchases and sales of
Raytheon Company Common Stock. For the years ended December 31, 1995,
1994 and 1993, purchases of Raytheon Company Common Stock amounted to
$494,407, $80,834 and $119,832, respectively. Sales of Raytheon Company
Common Stock amounted to $60,693, $20,308 and $27,516 in 1995, 1994 and
1993, respectively.
G. Plan Transfers:
--------------
Effective March 16, 1996, the accounts of certain employees of Harbert
Yeargin, Inc. who participated in the Plan were transferred out of the
Plan and into the Raytheon Savings and Investment Plan.
Effective February 23, 1995 , the accounts of certain employees of
Amana Refrigeration, Inc. who participated in the Plan were transferred
out of the Plan and into the Raytheon Savings and Investment Plan.
Effective December 31, 1994, all Plan assets and the accounts of all
participants of the Raytheon Subsidiary Savings and Investment Plan were
transferred into the Plan.
Effective May 4, 1994, the accounts of all employees of NASA Logistics
Support Services who participated in the Raytheon Savings and Investment
Plan were transferred into the Plan.
Effective February 10, 1994, the accounts of certain employees of
Caloric Corporation who participated in the Raytheon Subsidiary Savings
and Investment Plan were transferred into the Plan.
H. Other Additions and Deductions:
------------------------------
Other additions and deductions include transfers of participant accounts
between the Raytheon Employee Savings and Investment Plan and the
Raytheon Savings and Investment Plan, the Raytheon Savings and
Investment Plan for Specified Hourly Payroll Employees and the Raytheon
Savings and Investment Plan for Puerto Rico Based Employees for those
participants who changed plans during the year.
<PAGE>
10
RAYTHEON EMPLOYEE SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
I. Fund Data:
---------
<TABLE>
<CAPTION>
The following is a summary of net assets available for plan benefits by fund
as of December 31:
1995
------------------------------------------------------------------------------------
Guaranteed Raytheon Stock
Income Equity Common Index Balanced Loan
Fund Fund Stock Fund Fund Fund Fund Total
----------- --------- ----------- --------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments, at contract value:
Bankers Trust $1,309,599 $ 1,309,599
Prudential Insurance Company
of America 838,350 838,350
Metropolitan Life Insurance
Company 1,311,800 1,311,800
Investments, at fair value:
Fidelity Equity Income Fund
(68,384 shares) - $2,593,817 2,593,817
Raytheon Company Common Stock
(64,797 shares) - - $3,061,678 3,061,678
BT Pyramid Equity Index Fund
(1,058 shares) - - - $1,461,038 1,461,038
Fidelity Balanced Fund
(98,323 shares) - - - - $1,329,322 1,329,322
Loans receivable from participants - - - - - $1,091,690 1,091,690
----------- ---------- ---------- ---------- ---------- ----------- ------------
Total investments $3,459,749 $2,593,817 $3,061,678 $1,461,038 $1,329,322 $1,091,690 $12,997,294
Receivables:
Accrued investment income - - 156 72 - 228
Employee deferrals 1,973 2,867 384 1,524 1,657 8,405
Employer contributions 425 90 32 35 20 602
Cash and cash equivalents 39,656 - 24,710 14,714 - 79,080
----------- ---------- ---------- ---------- ---------- ----------- ------------
Total assets $3,501,803 $2,596,774 $3,086,960 $1,477,383 $1,330,999 $1,091,690 $13,085,609
Liabilities:
Other payables - - - - - - -
Accrued expenses - - - 546 - - 546
----------- ---------- ---------- ---------- ---------- ----------- ------------
Total liabilities - - - 546 - - 546
Net assets available for plan
benefits $3,501,803 $2,596,774 $3,086,960 $1,476,837 $1,330,999 $1,091,690 $13,085,063
----------- ---------- ---------- ---------- ---------- ----------- ------------
</TABLE>
<PAGE>
11
RAYTHEON EMPLOYEE SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
I. Fund Data, Continued:
--------------------
<TABLE>
<CAPTION>
The following is a summary of net assets available for plan benefits by
fund as of December 31:
1994
--------------------------------------------------------------------------------------
Guaranteed Raytheon Stock
Income Equity Common Index Balanced Loan
Fund Fund Stock Fund Fund Fund Fund Total
----------- --------- ----------- --------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments, at contract value:
Bankers Trust $1,237,529 $1,237,529
Prudential Insurance Company
of America 1,231,874 1,231,874
Metropolitan Life Insurance
Company 797,096 797,096
Investments, at fair value:
Fidelity Equity Income Fund
(61,400 shares) - $1,884,997 1,884,997
Raytheon Company Common Stock
(22,914 shares) - - $1,463,602 1,463,602
BT Pyramid Equity Index Fund
(775 shares) - - - $776,258 776,258
Fidelity Balanced Fund
(103,154 shares) - - - $1,267,767 1,267,767
Loans receivable from
participants - - - $943,945 943,945
----------- --------- ----------- --------- --------- ---------- -----------
Total investments 3,266,499 1,884,997 1,463,602 776,258 1,267,767 943,945 9,603,068
Receivables:
Accrued investment income - - 83 39 - 122
Employee deferrals 6,988 8,297 7,513 5,411 8,236 36,445
Cash and cash equivalents 53,719 - 19,192 8,454 81,365
----------- --------- ----------- --------- --------- ---------- -----------
Total assets 3,327,206 1,893,294 1,490,390 790,162 1,276,003 943,945 9,721,000
Liabilities:
Payable for outstanding purchases - - 3,551 - - 3,551
Accrued expenses 8,182 6,057 4,899 2,482 4,941 - 26,561
----------- --------- ----------- --------- --------- ---------- -----------
Total liabilities 8,182 6,057 8,450 2,482 4,941 - 30,112
----------- --------- ----------- --------- --------- ---------- -----------
Net assets available for plan
benefits $3,319,024 $1,887,237 $1,481,940 $787,680 $1,271,062 $943,945 $9,690,888
----------- --------- ----------- --------- --------- ---------- -----------
</TABLE>
<PAGE>
12
RAYTHEON EMPLOYEE SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
I. Fund Data, Continued:
--------------------
<TABLE>
<CAPTION>
The following is a summary of changes in net assets available for plan benefits by
fund as of December 31:
1995
----------------------------------------------------------------------------------------
Guaranteed Raytheon Stock
Income Equity Common Index Balanced Loan
Fund Fund Stock Fund Fund Fund Fund Total
------------ --------- ----------- --------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributable to:
Investment income:
Change in net appreciation
(depreciation) of investments $440,919 $ 781,966 $ 317,656 $ 114,732 $ 1,655,273
Interest $ 216,962 - 1,907 861 - 219,730
Dividends - 65,734 42,234 - 51,868 159,836
Capital gains distributions - 83,196 - - - 83,196
----------- --------- ----------- --------- --------- ---------- -----------
216,962 589,849 826,107 318,517 166,600 2,118,035
Contributions and deferrals:
Employee deferrals 746,036 666,997 721,214 503,769 514,957 3,152,973
Employer contributions 542 90 32 35 20 719
----------- --------- ----------- --------- --------- ---------- -----------
Total additions 963,540 1,256,936 1,547,353 822,321 681,577 5,271,727
----------- --------- ----------- --------- --------- ---------- -----------
Deductions from net assets attributable to:
Benefits to and withdrawals
by participants 253,619 162,740 104,308 95,877 153,739 770,283
Administrative expenses 1,763 1,122 1,351 578 616 5,430
Other deductions, net 122,353 293,951 206,154 147,627 264,374 $ 67,380 1,101,839
----------- --------- ----------- --------- --------- ---------- -----------
Total deductions 377,735 457,813 311,813 244,082 418,729 67,380 1,877,552
----------- --------- ----------- --------- --------- ---------- -----------
Interfund transfers (403,026) (89,586) 369,480 110,918 (202,911) 215,125 -
Increase in net assets 182,779 709,537 1,605,020 689,157 59,937 147,745 3,394,175
----------- --------- ----------- --------- --------- ---------- -----------
Net assets, beginning of year 3,319,024 1,887,237 1,481,940 787,680 1,271,062 943,945 9,690,888
----------- --------- ----------- --------- --------- ---------- -----------
Net assets, end of year $3,501,803 $2,596,774 $3,086,960 $1,476,837 $1,330,999 $1,091,690 $13,085,063
---------- ---------- ----------- --------- --------- ---------- -----------
</TABLE>
<PAGE>
13
RAYTHEON EMPLOYEE SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
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:
1994
------------------------------------------------------------------------------------
Guaranteed Raytheon Stock
Income Equity Common Index Balanced Loan
Fund Fund Stock Fund Fund Fund Fund Total
----------- --------- ----------- --------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributable to:
Investment income:
Change in net appreciation
(depreciation) of investments $(71,932) $51,361 $ 12,718 $ (31,143) $ (38,996)
Interest $ 140,115 - 436 206 - 140,757
Dividends - 31,170 20,217 - 12,624 64,011
Capital gains distributions - 67,730 - - - - 67,730
----------- --------- ----------- --------- --------- ---------- -----------
140,115 26,968 72,014 12,924 (18,519) 233,502
----------- --------- ----------- --------- --------- ---------- -----------
Contributions and deferrals:
Employee deferrals 434,009 455,767 349,036 255,044 464,886 1,958,742
Transfers in 841,903 704,481 759,671 268,837 680,676 $269,912 3,525,480
Other additions, net 918,166 355,765 135,892 79,195 46,649 - 1,535,667
----------- --------- ----------- --------- --------- ---------- -----------
2,194,078 1,516,013 1,244,599 603,076 1,192,211 269,912 7,019,889
----------- --------- ----------- --------- --------- ---------- -----------
Total additions 2,334,193 1,542,981 1,316,613 616,000 1,173,692 269,912 7,253,391
----------- --------- ----------- --------- --------- ---------- -----------
Deductions from net assets attributable to:
Benefits to and withdrawals
by participants 105,906 26,158 31,265 8,013 6,465 - 177,807
Administrative expenses 1,317 711 1,381 353 1,136 - 4,898
----------- --------- ----------- --------- --------- ---------- -----------
Total deductions 107,223 26,869 32,646 8,366 7,601 - 182,705
----------- --------- ----------- --------- --------- ---------- -----------
Interfund transfers (170,764) (41,099) 43,419 15,437 49,842 103,165 -
----------- --------- ----------- --------- --------- ---------- -----------
Increase in net assets 2,056,206 1,475,013 1,327,386 623,071 1,215,933 373,077 7,070,686
Net assets, beginning of year 1,262,818 412,224 154,554 164,609 55,129 570,868 2,620,202
----------- --------- ----------- --------- --------- ---------- -----------
Net assets, end of year $3,319,024 $1,887,237 $1,481,940 $787,680 $1,271,062 $943,945 $9,690,888
----------- --------- ----------- --------- --------- ---------- -----------
</TABLE>
<PAGE>
14
RAYTHEON EMPLOYEE SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
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:
<TABLE>
<CAPTION>
1993
----------------------------------------------------------------------------------------
Guaranteed Raytheon Stock
Income Equity Common Index Balanced Loan
Fund Fund Stock Fund Fund Fund Fund Total
---------- -------- ---------- --------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributable to:
Investment income:
Change in net appreciation
(depreciation) of
investments $ 327,371 $ 146,707 $ 66,999 $ 33,424 $ 574,501
Interest $ 180,677 - 23 - - 180,700
Dividends - 37,057 27,111 - 4,492 68,660
Capital gains distributions - 1,413 - - 524 1,937
---------- ---------- ---------- --------- --------- ---------
180,677 365,841 173,841 66,999 38,440 825,798
---------- ---------- ---------- --------- --------- ---------
Contributions and deferrals:
Employee deferrals 700,632 460,542 105,678 242,676 52,520 1,562,048
Transfers in 1,244,727 392,045 130,208 156,134 43,348 $ 428,674 2,395,136
---------- ---------- ---------- --------- --------- --------- ----------
1,945,359 852,587 235,886 398,810 95,868 428,674 3,957,184
---------- ---------- ---------- --------- --------- --------- ----------
Total additions 2,126,036 1,218,428 409,727 465,809 134,308 428,674 4,782,982
---------- ---------- ---------- --------- --------- --------- ----------
Deductions from net assets attributable to:
Benefits to and withdrawals
by participants 145,078 40,595 17,728 16,240 730 - 220,371
Administrative expenses 8,814 2,853 1,052 1,130 381 - 14,230
Transfers out 6,712,769 4,260,265 1,313,252 1,617,788 397,849 367,457 14,669,380
---------- ---------- ---------- --------- --------- --------- ----------
Total deductions 6,866,661 4,303,713 1,332,032 1,635,158 398,960 367,457 14,903,981
---------- ---------- ---------- --------- --------- --------- ----------
Interfund transfers (450,024) 128,169 (97,780) (88,865) 319,781 188,719 -
---------- ---------- ---------- --------- --------- --------- ----------
Increase (decrease) in net assets (5,190,649) (2,957,116) (1,020,085) (1,258,214) 55,129 249,936(10,120,999)
Net assets, beginning of year 6,453,467 3,369,340 1,174,639 1,422,823 - 320,932 12,741,201
---------- ---------- ---------- --------- --------- --------- ----------
Net assets, end of year $1,262,818 $ 412,224 $ 154,554 $ 164,609 $ 55,129 $ 570,868 $2,620,202
---------- ---------- ---------- --------- --------- --------- ----------
</TABLE>
<PAGE>
15
RAYTHEON EMPLOYEE SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
J. Master Trust:
------------
As of December 31, 1995 and 1994, all Plan investments are included under
the Master Trust. At December 31, 1995, assets of the Plan represented 0.5%
of the total assets under the Master Trust. This was unchanged from 0.5% at
December 31, 1994. The following is a summary of net assets available for
plan benefits by fund under the Master Trust as of December 31:
<TABLE>
<CAPTION>
1995
--------------------------------------------------------------------------------------------
Raytheon
Guaranteed Common Stock
Income Equity Stock Index Balanced Loan
Fund Fund Fund Fund Fund Fund Total
------------ ------------ ------------ ------------ ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments, at contract value:
Bankers Trust $355,570,494 $355,570,494
Prudential Insurance Company
of America 227,621,525 227,621,525
Metropolitan Life Insurance
Company 356,168,133 356,168,133
Investments, at fair value:
Fidelity Equity Income Fund
(12,407,312 shares) $470,609,321 470,609,321
Raytheon Company Common Stock
(12,011,039 shares) $567,521,593 567,521,593
BT Pyramid Equity Index Fund
(162,981 shares) $225,079,988 225,079,988
Fidelity Balanced Fund
(7,645,074 shares) $103,361,407 103,361,407
Loans receivable from
participants $130,012,819 130,012,819
------------ ------------ ------------ ------------ ------------ ------------ --------------
Total investments 939,360,152 470,609,321 567,521,593 225,079,988 103,361,407 130,012,819 2,435,945,280
Receivables:
Accrued investment income 28,854 11,081 39,935
Cash and cash equivalents 10,766,863 4,580,403 2,266,827 17,614,093
------------ ------------ ------------ ------------ ------------ ------------ --------------
Total assets 950,127,015 470,609,321 572,130,850 227,357,896 103,361,407 130,012,819 2,453,599,308
Liabilities:
Total liabilities - - - - - - -
------------ ------------ ------------ ------------ ------------ ------------ --------------
Net assets available for plan
benefits $950,127,015 $470,609,321 $572,130,850 $227,357,896 $103,361,407 $130,012,819 $2,453,599,308
============ ============ ============ ============ ============ ============ ==============
Percentage of plan assets
included under the Master Trust 0.4% 0.6% 0.5% 0.7% 1.3% .8% 0.5%
</TABLE>
<PAGE>
16
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:
<TABLE>
<CAPTION>
1994
-----------------------------------------------------------------------
Guaranteed Raytheon Stock
Income Equity Common Index Balanced
Fund Fund Stock Fund Fund Fund Loan Fund Total
---------- ------ ---------- ----- -------- --------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments, at
contract value:
Bankers Trust $363,462,005 $ 363,462,005
Prudential Insurance
Company of America 234,106,898 234,106,898
Metropolitan Life
Insurance Company 361,801,731 361,801,731
Investments, at fair value:
Fidelity Equity Income
Fund (10,843,663 shares) - $332,900,446 332,900,446
Raytheon Company Common
Stock (5,052,810 shares) - - $322,748,238 322,748,238
BT Pyramid Equity Index
Fund (123,405 shares) - - - $123,699,986 123,699,986
Fidelity Balanced Fund
(8,610,351 shares) - - - - $105,826,958 105,826,958
- $123,811,382 123,811,382
------------ ------------ ------------ ------------ ------------ ------------ -------------
Total investments 959,370,634 332,900,446 322,748,238 123,699,986 105,826,958 123,811,382 1,968,357,644
Receivables:
Accrued investment income 18,327 6,363 24,690
Cash and cash equivalents 15,777,199 4,232,020 1,347,221 21,356,440
------------ ------------ ------------ ------------ ------------ ------------ -------------
Total assets 975,147,833 332,900,446 326,998,585 125,053,570 105,826,958 123,811,382 1,989,738,774
Liabilities:
Payable for outstanding
purchases - - 783,126 - - - 783,126
------------ ------------ ------------ ------------ ------------ ------------ -------------
Total liabilities - - 783,126 - - - 783,126
------------ ------------ ------------ ------------ ------------ ------------ -------------
Net assets available
for plan benefits $975,147,833 $332,900,446 $326,215,459 $125,053,570 $105,826,958 $123,811,382 $1,988,955,648
============ ============ ============ ============ ============ ============ =============
Percentage of plan
assets included
under the Master Trust 0.3% 0.6% 0.5% 0.6% 1.2% .8% 0.5%
</TABLE>
Continued
16
<PAGE>
J. Master Trust, Continued:
-----------------------
The following is a summary of the changes in net assets available for
plan benefits by fund under the Master Trust as of December 31:
<TABLE>
<CAPTION>
Guaranteed Raytheon Stock
Income Equity Common Index Balanced
Fund Fund Stock Fund Fund Fund Total
---------- ------ ---------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
1995:
Investment income:
Change in appreciation
(depreciation) of
investments $ 73,248,498 $148,529,866 $45,735,616 $10,504,382 $278,018,362
Interest $63,061,904 - 330,559 152,395 - 63,544,858
Dividends - 11,010,111 7,828,571 - 4,503,326 23,342,008
Capital gains
and distributions - 39,117,479 - - - 39,117,479
----------- ------------ ------------ ----------- ----------- ------------
Total investment income $63,061,904 $123,376,088 $156,688,996 $45,888,011 $15,007,708 $404,022,707
=========== ============ ============ =========== =========== ============
1994:
Investment income:
Change in appreciation
(depreciation) of
investments - (34,214,567) (17,318,026) (461,152) (7,961,156) (59,954,901)
Interest 57,046,896 - 143,416 45,820 - 57,236,132
Dividends - 9,504,997 6,930,447 - 3,364,162 19,799,606
Capital gains
and distributions - 21,354,374 - - - 21,354,374
----------- ------------ ------------ ----------- ----------- ------------
Total investment income $57,046,896 $ (3,355,196) $(10,244,163) $ (415,332) $(4,596,994) $ 38,435,211
=========== ============ ============ =========== =========== ============
</TABLE>
<PAGE> 1
EXHIBIT (99.3a)
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Raytheon Company:
We consent to the incorporation by reference in the Registration Statements
of Raytheon Company on Form S-8 (File No. 33-3723, No. 33-14165, No. 33-15397,
No. 33-21454 and No. 33-49043) of our report dated May 31, 1996 on our audits of
the financial statements of the Raytheon Employee Savings and Investment Plan as
of December 31, 1995 and 1994 and for each of the three years in the period
ended December 31, 1995, which report is included in this annual report on Form
11-K. We also consent to the reference to our firm under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
June 26, 1996
<PAGE> 1
EXHIBIT 99.3b
RAYTHEON EMPLOYEE
SAVINGS AND INVESTMENT PLAN
Provisions in Effect as of January 1, 1996
ARTICLE I -- ADOPTION AND PURPOSE
The Plan was established effective July 1, 1987, as the Badger Savings
and Investment Plan for the purpose of providing employees with a tax-effective
means of allocating a portion of their salary to be invested in one or more
investment opportunities specified in the Badger Plan as determined by the
employee and set aside for short-term and long-term needs of the employee. The
Badger Plan was applicable only to eligible employees of The Badger Company,
Inc. from July 1, 1987, to May 12, 1993. On May 12, 1993, the Accounts of all
Participants were transferred to the Raytheon Employee Savings and Investment
Plan. Thereafter, the Plan was renamed the Raytheon Employee Savings and
Investment Plan and is applicable to employees of Raytheon Company and its
subsidiaries who are employed in units designated by the Subsidiary or the
Company as a Covered Unit and, in the case of Subsidiary units, approved by an
authorized officer of the Company for participation in the Plan.
It is intended that the Plan will comply with all of the requirements
for a qualified defined contribution plan under Sections 401(a) and 401(k) of
the Internal Revenue Code and will be amended from time to time to maintain
compliance with these requirements. The terms used in the Plan have the meanings
specified in Article XIV unless the context indicates otherwise. The Plan is
intended to constitute a plan described in Section 404(c) of the Employee
Retirement Income Security Act and Title 29 of the Code of Federal Regulations,
* 2550.404(c)-1. Participants in the Plan are responsible for selecting their
own investment opportunities from the options available under the Plan and the
Plan fiduciaries are relieved of any liability for any losses which are a direct
and necessary result of investment instructions given by a participant or
beneficiary.
The Plan as restated herein shall be effective as of June 1, 1994 or
such other dates as may be specifically provided herein or as otherwise required
by law for the Plan or the Raytheon Subsidiary Savings and Investment Plan,
which is merged into this Plan pursuant to Section 13.6, to satisfy the
requirements of Section 401(a) of the Code. The rights of former Employees whose
Severance from Service Date occurred prior to the date of any amendment shall be
governed by the terms of the Plan in effect on their Severance from Service Date
except as otherwise provided herein.
<PAGE>
2
ARTICLE II -- ELIGIBILITY
2.1 Eligibility Requirements - Present Employees -- Each Eligible
Employee of the Company or a Subsidiary who was in a Period of Service in a
Covered Unit as of the date specified in Appendix A was eligible to join the
Plan as of said date or any subsequent Entry Date selected by the Eligible
Employee provided he or she continues in the same Period of Service or meets the
requirements under Section 2.2.
2.2 Eligibility Requirements - Employees -- Each other Eligible
Employee may join the Plan as of the first Entry Date coincident with or next
following completion of a Period of Service of three (3) consecutive months
commencing on the Employee's Commencement Date or Reemployment Commencement
date, whichever is applicable.
2.3 Procedure for Joining the Plan -- Each Eligible Employee who meets
the requirements of Section 2.1 or Section 2.2 may join the Plan by
communicating with Fidelity in accordance with instructions in an enrollment kit
which will be made available to each Eligible Employee. An enrollment in the
Plan shall not be deemed to have been completed until the Employee has
designated: a percentage by which Participants' Eligible Compensation shall be
reduced as an Elective Deferral in accordance with the requirements of Section
3.3(b) subject to the non-discrimination test described in Section 3.3(a);
election of investment funds as described in Article IV; one or more
Beneficiaries; and such other information as specified by Fidelity. Enrollment
will be effective as of the first administratively feasible Pay Period following
completion of enrollment. The Administrator in its discretion may from time to
time make exceptions and adjustments in the foregoing procedure on a uniform and
nondiscriminatory basis.
2.4 Transfer to Position Not Covered by Plan -- If a Participant is
transferred to another position with the Employer in which the Participant is no
longer an Eligible Employee, the Participant will remain a Participant of the
Plan with respect to Elective Deferrals previously made but will no longer be
eligible to have Elective Deferrals made to the Plan on his or her behalf until
he or she again becomes an Eligible Employee. In the event the Participant is
subsequently transferred to a position in which he or she again becomes an
Eligible Employee, the Participant may renew Elective Deferrals by communicating
with Fidelity and providing all of the information requested by Fidelity. The
renewal of Elective Deferrals will be effective as of the first administratively
feasible Pay Period following receipt by Fidelity of the requested information.
2.5 Break in Service Rules
(a) Periods of Service -- In determining the length of a
Period of Service, the Administrator shall include all Periods of Service,
except a Period of Service prior to a Period of Severance of twelve (12) months
or more, unless subsequent to said Period of Severance the Participant completes
a Period of Service of at least twelve (12) months.
<PAGE>
3
(b) Periods of Severance -- In determining the length of a
Period of Service, the Administrator shall exclude all Periods of Severance,
except that in the event a Participant returns from a quit, discharge, or
Retirement, within twelve (12) months from the earlier of:
(i) the date of the quit, discharge, or Retirement, or
(ii) if the Participant was absent from employment for reasons such as layoff or
Authorized Leave of Absence on the day of the quit, discharge, or Retirement,
the first day of such absence, the period of absence will be included as a
Period of Service.
(c) Other Periods -- In making the determinations described in
subsections (a) and (b) of this Section 2.5, the second, third, and fourth
consecutive years of a Layoff (from the first anniversary of the last day paid
to the fourth anniversary of the last day paid) and any period in excess of one
(1) year of an Authorized Leave of Absence shall be regarded as neither a Period
of Service nor a Period of Severance.
ARTICLE III -- CONTRIBUTIONS
3.1 Elective Deferrals -- Elective Deferrals must be made in one
percent (1%) increments with a minimum Elective Deferral of one percent (1%) of
Eligible Compensation and a maximum Elective Deferral of seventeen percent
(17%); provided, however, that effective for any Plan Year beginning on or after
January 1, 1987, in no event may the amount of Elective Deferrals to the Plan,
when taken into account with all other elective deferrals (as defined in Code
Section 402(g)) made by a Participant under any other plan maintained by the
Employer, exceed $7,000 (adjusted for increases in the cost of living under Code
Section 402(g)) in any calendar year. If a Participant participates in another
plan or arrangement which is not maintained by the Employer and which permits
elective deferrals in any calendar year and his total Elective Deferrals under
the Plan and other plan(s) exceed $7,000 (as adjusted) in a calendar year, he
may request to receive a distribution of the amount of the excess deferral (a
deferral in excess of $7,000 (as adjusted)) that is attributable to Elective
Deferrals to this Plan together with earnings thereon, notwithstanding any
limitations on distributions contained in the Plan. Such distribution shall be
made by the April 15 following the Plan Year in which the Elective Deferrals
were made, provided that the Participant notifies the Administrator of the
amount of the excess deferral that is attributable to Elective Deferrals to the
Plan and requests such a distribution. The Participant's notice must be received
by the Administrator no later than the March 1 following the Plan Year of the
excess deferral. In the absence of such notice, the amount of such excess
deferral attributable to Elective Deferrals to this Plan shall be subject to all
limitations on withdrawals and distributions in the Plan. In addition to
distributing excess deferrals at the request of the Participant, the
Administrator shall distribute any deferrals made under this Plan or any other
plan of the Employer in excess of the statutory maximum deferral of $7,000 (as
adjusted). For this purpose as provided in 26 CFR *1.402(g)-1(e)(2), a
Participant is deemed to notify the Administrator of any excess deferrals that
arise by taking into account only those Elective Deferrals made to this Plan and
any other plans of this Employer and to request that such excess deferrals be
distributed by the Plan Administrator. The distribution of excess deferrals will
include any earnings or be reduced by any loss allocable to the excess deferrals
pursuant to the Plan method of allocating earnings or losses and calculated to
the last day of the Plan Year in which the excess deferrals were made.
<PAGE>
4
The Administrator may establish prospectively lower limits for Higher
Paid Participants for the purpose of complying with Internal Revenue Code
requirements in an orderly manner.
3.2 Limitations on Elective Deferrals --
(a) In no event may Elective Deferrals made on behalf of all
Higher Paid Eligible Employees with respect to any Plan Year result in an Actual
Deferral Percentage for such group of Higher Paid Eligible Employees which
exceeds the greater of (i) or (ii) where:
(i) is an amount equal to 125 percent of the Actual Deferral Percentage
for all Non-Higher Paid Eligible Employees who have satisfied the eligibility
requirements of Article II with respect to such Plan Year; and
(ii) is an amount equal to the Actual Deferral Percentage for all
Non-Higher Paid Eligible Employees who have satisfied the eligibility
requirements of Article II with respect to such Plan Year and two percent (2%),
provided that such amount does not exceed 200 percent of such Actual Deferral
Percentage.
(b) The Administrator shall be authorized to implement rules
authorizing or requiring reductions in Elective Deferrals that may be made by
Higher Paid Eligible Employees during the Plan Year (prior to any contributions
to the Trust) so that the limitation of Section 3.2(a) is satisfied.
(c) The Company may in its discretion make Qualified
Nonelective Contributions to the Accounts of certain Non-Higher Paid Eligible
Employees to the extent required to satisfy the limitations of Section 3.2(a).
(d) If the limitation under Section 3.2(a) is exceeded in any
Plan Year, the Excess Amounts made on behalf of Higher Paid Eligible Employees
with respect to a Plan Year (and earnings allocable thereto) shall then be
distributed to such Employees as soon as practicable after the end of such Plan
Year, but no later than the last day of the immediately following Plan Year. The
Excess Amounts distributed shall include Elective Deferrals and the income
allocable thereto. The amount of income allocable to Excess Amounts shall be
determined in accordance with the regulations issued under Section 401(k) of the
Code and shall include income for the Plan Year for which the Excess Amounts
were made. Any such distributions shall be reduced by the amount of any
distributions made pursuant to Section 3.1 above.
(e) The Administrator may utilize any combination of the
methods described in Sections 3.2(b), (c) and (d) to assure that the limitations
of Section 3.2(a) are satisfied.
<PAGE>
5
(f) For purposes of this Section 3.2, the following definitions
and special rules shall apply:
(i) The term "Annual Earnings" means the Employee's wages which are
required to be reported on IRS Form W-2 for the calendar which coincides with
the Plan Year.
(ii) The term "Actual Deferral Percentage" shall mean, with respect to
any group of actively employed Eligible Employees who have satisfied the
eligibility requirements of Article II for a Plan Year, the average of the
ratios, calculated separately for each such Eligible Employee in the group, of:
(A) The amount of Elective Deferrals paid to the Trust Fund for
such Plan Year, divided by
(B) The Eligible Employee's Annual Earnings, including any Elective
Deferrals made by the Companies to the Plan on behalf of the Eligible Employee
and any pre-tax elective contributions made by the Companies which are
excludible from the Eligible Employee's income under Section 125 of the Code.
Elective Deferrals shall be taken into account for a Plan Year only if such
amounts are allocated to the Eligible Employee's Account as of a date within
that Plan Year. For this purpose, an Elective Deferral is considered allocated
as of a date within a Plan Year if the allocation is not contingent on
participation or performance of services after such date and the Elective
Deferral is actually paid to the Trust Fund no later than 12 months after the
Plan Year to which the contribution relates.
(iii) The term "Excess Amounts" shall mean with respect to each Higher
Paid Eligible Employee who has satisfied the eligibility requirements of Article
II for a Plan Year, the amount equal to total Elective Deferrals made on behalf
of such Employee (determined prior to the application of the leveling procedure
described below) minus the product of the Employee's Actual Deferral Percentage
(determined after the leveling procedure described below) multiplied by the
amount specified in Section 3.2(f)(ii)(B) above. In accordance with the
regulations issued under Section 401(k) of the Code, Excess Amounts shall be
determined by a leveling procedure under which the Actual Deferral Percentage of
the Higher Paid Eligible Employee with the highest such percentage shall be
reduced to the extent required to enable the limitation of Section 3.2(a) to be
satisfied or, if it results in a lower reduction, to the extent required to
cause such Higher Paid Eligible Employee's Actual Deferral Percentage to equal
the Actual Deferral Percentage of the Higher Paid Eligible Employee with the
next highest Actual Deferral Percentage. This leveling procedure shall be
repeated until the limitation of Section 3.2(a) is satisfied.
<PAGE>
6
(iv) The term "Qualified Nonelective Contributions" means contributions
that are made pursuant to Sections 3.2(c), meet the requirements of Section
401(m)(4)(C) of the Code and the regulations issued thereunder, and which are
designated as a Qualified Nonelective Contribution for purposes of satisfying
the limitations of Sections 3.2(c). Qualified Nonelective Contributions shall be
nonforfeitable when made and are distributable only in accordance with the
distribution and withdrawal provisions that are applicable to Elective Deferrals
under the Plan; provided, however, that Qualified Nonelective Contributions may
not be withdrawn on account of financial hardship. If any Qualified Nonelective
Contributions are made, the Company shall keep such records as necessary to
reflect the amount of such contributions made for purposes of satisfying the
limitations of Sections 3.2(c).
(v) In the event the Companies maintain two or more plans that are
treated as a single plan for purposes of Sections 401(a)(4) and 410(b) of the
Code (other than Section 410(b)(2)(A)(ii) of the Code), all elective deferrals
made under the two plans shall be treated as made under a single plan, and if
two or more of such plans are permissively aggregated for purposes of Section
401(k) of the Code, such plans shall be treated as a single plan for purposes of
satisfying Sections 401(a)(4) and 410(b) of the Code.
(vi) In determining the Actual Deferral Percentage of a Higher Paid
Eligible Employee, all cash or deferred arrangements in which such Higher Paid
Eligible Employee is eligible to participate shall be treated as a single
arrangement.
(vii) The family aggregation rules of Section 414(q)(6) of the Code
shall apply to any Higher Paid Eligible Employee who is a five percent owner or
one of the ten most highly compensated Higher Paid Eligible Employees. The
Actual Deferral Percentage for the family group, which is treated as one Higher
Paid Eligible Employee, is the Actual Deferral Percentage determined by
combining the contributions and compensation of all eligible Family Members.
Except to the extent taken into account in this Paragraph (vii), the
contributions and compensation of all Family Members are disregarded in
determining the Actual Deferral Percentages for all Employees.
(g) The limitations of this Section 3.2 shall apply to Plan Years
beginning on or after January 1, 1987.
3.3 Reinstatement of Reduced Amounts -- Any reduction effected pursuant
to Section 3.2(b) will remain in effect for the remainder of the Plan Year in
which the reduction occurs. A Participant whose Elective Deferral has been
reduced may elect, subject to the approval of the Administrator, to increase his
or her Elective Deferral effective as of the Entry Date in January of the next
Plan Year. This election must be made in accordance with the procedure described
in Section 3.4. The reduction described in Section 3.2(b) will not be
automatically reinstated.
3.4 Change in Elective Deferrals -- Except as provided in Sections 3.2
and 3.3, any Participant may change his or her Elective Deferral percentage by
notifying Fidelity, such changes to take effect as of the next administratively
feasible Pay Period.
<PAGE>
7
3.5 Voluntary Reduction of Elective Deferral to Zero -- Any Participant
may elect to reduce the level of the Participant's Elective Deferral to zero as
of the beginning of any pay period. The reduction will take effect as soon as
practicable following telephone notification by the Participant to Fidelity. A
Participant who has reduced his or her Elective Deferral to zero may again make
Elective Deferrals as of the next administratively feasible Pay Period
subsequent to telephone notification to Fidelity.
3.6 Rollover Contributions and Transfers --
(a) Participants may transfer into the Plan qualifying
rollover amounts (as defined in Section 402 of the Code) received from other
qualified plans subject to Section 401(k) or Section 401(m) of the Code;
qualified defined contribution pension or profit sharing plans, provided that no
federal income tax has been required to have been paid previously on such
amounts; or rollover contributions from an individual retirement account
described in Section 408(d)(3)(A)(ii) of the Code (referred to herein as a
"conduit IRA"). Such transfers will be referred to as "rollover contributions"
and will be subject to the following conditions:
(i) the transferred funds are received by the Trustee no later than
sixty (60) days from receipt by the Employee of a distribution from another
qualified Section 401(k) or Section 401 (m) plan or, in the event that the funds
are transferred from a conduit IRA, no later than sixty (60) days from the date
that the Participant receives such funds from the individual retirement account,
subject, however, to (v) below where applicable;
(ii) the amount of such rollover contributions shall not exceed
the limitations set forth in Section 402 of the Code;
(iii) rollover contributions shall be taken into account by the
Administrator in determining the Participant's eligibility for a loan pursuant
to Article VII;
(iv) rollover contributions may be distributed at the request of
the Participant, subject to the same administrative procedures as apply to other
distributions;
(v) rollover contributions may not be received by the Trustee
earlier than the Entry Date upon which the Participant elects to join the Plan;
(vi) rollover contributions transferred pursuant to this Section
3.6 shall be credited to the Participant's Rollover Contribution Account.
Rollover contributions will be invested upon receipt by the Trustee;
(vii) no rollover contribution will be accepted unless (A) the Employee
on whose behalf the rollover contribution will be made is either a Participant
or has notified the Administrator that he intends to become a Participant on the
first date on which he is eligible therefor; and (B) all required information,
including selection of specific investment accounts, is provided to Fidelity.
When the rollover contribution has been deposited, any further change in
investment allocation of future deferrals or transfer of account balances
between investment funds will be effected through the procedures set forth in
Sections 4.2 and 4.3.
(viii) under no circumstances shall the Administrator accept as
rollover contributions amounts which have previously been subject to federal
income tax.
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(b) Effective January 1, 1993, Participants may direct that
"eligible rollover distributions," as defined in Section 402(c) of the Code, be
transferred directly to the Plan. Rules similar to those applicable to "rollover
contributions" shall apply to amounts transferred directly to the Plan.
(c) Participants who are also covered under the Raytheon Stock
Ownership Plan and who are entitled to diversify their accounts under such plan,
may direct that the portion of their account which is eligible for
diversification under such plan be transferred to the Plan. Rules similar to
those applicable to "rollover contributions" shall apply to amounts transferred
to this Plan except that such transferred amounts shall not be eligible for
loans or withdrawals.
3.7 Refund of Contributions to the Companies -- Notwithstanding the
provisions of Article XII, if, or to the extent that, the Companies' deductions
for contributions made to the Plan are disallowed, the Companies will have the
right to obtain the return of any such contributions for a period of one year
from the date of disallowance. For this purpose, all Elective Deferrals are made
subject to the conditions that they are deductible under the Code for the
taxable year of the Companies for which the contribution is made. Furthermore,
any contribution made by the Companies on the basis of a mistake in fact may be
returned to the Companies within one year from the date such contribution was
made.
3.8 Non-Elective Contributions -- Specified Amounts -- Each of the
Companies may make contributions to the Plan on behalf of Employees in Covered
Units, provided that the name of the unit, the effective date of such
contributions and the specified amount is set forth on Appendix B hereto. Such
contributions and the contributions described in Section 3.9 shall be Qualified
Non-Elective Contributions as defined in Section 3.2(f)(iv) and shall be
included in determining the actual deferral percentage under Section 3.2. If the
contributions described in this Section 3.8 and in Section 3.9 are made on
behalf of an Employee who is not a Participant, an Account shall be established
for such Employee and the Employee shall have the right to elect investment
options under Section 4.1. If the Employee does not make a valid election in
which investment options are designated for 100% of the Participant's Account,
then 100% of Participant's Account shall be invested in Fund B, a fixed income
fund. The Employee may, in accordance with Sections 4.2 and 4.3, change the
investment allocation for future deferrals and transfer account balances between
investment funds.
3.9. Non-Elective Contributions -- Service Contract Act Reconciliation
Amounts -- Each of the Companies may make contributions to the Plan on behalf of
Employees in Covered Units consisting of the entire amount or any part of any
deficiency between health and welfare and/or pension contributions actually made
under a contract covered by the Service Contract Act and the amount of such
contribution or contributions required by a wage determination issued under the
contract. Such amount shall be calculated in accordance with the formula
specified in 29 CFR *4.175 as follows: The total amount contributed for a month,
calendar or contract quarter, or other specified time is divided by the total
hours worked under the contract by service employees subject to the Act during
the period in question to determine an hourly contribution rate.
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9
The difference between the contribution rate required in the determination and
the actual contribution may be contributed to the Plan on behalf of each
Employee for purposes of fulfilling the Employer's fringe benefit obligations
under the Service Contract Act.
ARTICLE IV - INVESTMENT OF ACCOUNTS
4.1 Election of Investment Options -- Upon enrollment in the Plan, each
Participant shall direct that the funds in the Participant's Account be invested
in increments of ten percent (10%) in one or more of the following investment
options:
Fund A - an equity fund designated by the Administrator;
Fund B - a fixed income fund designated by the Administrator;
Fund C - Raytheon Company common stock fund;
Fund D - a stock index fund designated by the Administrator,
Fund E - a balanced fund designated by the Administrator;
Fund F - a growth fund, designated by the Administrator, investing
primarily in equities of companies of all types and sizes;
Fund G - a growth fund, designated by the Administrator, investing
primarily in equities of well-known and established companies.
In its discretion, the Administrator may from time to time designate new funds
and, where appropriate, preclude investment in existing funds and provide for
the transfer of Accounts invested in those funds to other funds selected by the
Participant or, if no such election is made, to Fund B or similar low risk fixed
income fund as determined by the Administrator in its discretion.
In the event that a Participant fails to designate the investment option for
100% of the Participant's account or erroneously designates the investment of
more than 100%, the investment designation will be a nullity and the Enrollment
Agreement will be returned to the Eligible Employee. If the Enrollment Agreement
is corrected and returned, enrollment will not be effective until the next Entry
Date with respect to which the notice requirements set forth in Section 2.3 are
satisfied.
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10
4.2 Change in Investment Allocation of Future Deferrals --Each
Participant may elect to change the investment allocation of future Elective
Deferrals and rollover contributions effective as of the first administratively
feasible Business Day subsequent to telephone notice to Fidelity. Any changes
must be made in increments of one percent (1%) of the Participant's Account or
in a specified whole dollar amount and must result in a total investment of one
hundred percent (100%) of the Participant's Account.
4.3 Transfer of Account Balances Between Investment Funds -- Each
Participant may elect to transfer all or a portion of the amount in the
Participant's Employee Account and Rollover Contribution Account between
investment funds effective as of the first administratively feasible Business
Day following telephone notice to Fidelity. Such transfers must be made in
either one percent (1%) increments of the entire Account or in a specified
amount in whole dollars and, as of the completion of the transfer, must result
in investment of one hundred percent (100%) of the Account. Transfers shall be
effected by telephone notice to Fidelity. In determining the amount of the
transfer, the Participant's Account shall be valued as of the close of business
on the Valuation Date on which telephone notice is received; provided, however,
that in any case where the telephone notice is received after 4:00 p.m. Eastern
Time (daylight or standard, whichever is in effect on the date of the call), the
Account shall be valued as of the close of business on the next Valuation Date.
4.4 Ownership Status of Funds -- The Trustee shall be the owner of
record of the assets in the funds specified as Funds A, B, C, D and E and such
other funds as may be established by the Administrator. The Administrator shall
have records maintained as of the Valuation Date for each fund allocating a
portion of the fund to each Participant who has elected that his or her Account
be invested in such fund. The records shall reflect each Participant's portion
of Funds A, B, D and E in a cash amount and shall reflect each Participant's
portion of Fund C in cash and unitized shares of stock.
4.5 Voting Rights -- Participants whose Accounts have shares of
participation in the Raytheon Company Common Stock Fund on the last business day
of the second month preceding the record date (the "Voting Eligibility Date")
for any meeting of stockholders have the right to instruct the Trustee as to
voting at such meeting. The number of votes is determined by dividing the value
of the shares in the Participant's Account in the Raytheon Common Stock Fund by
the closing price of Raytheon Common Stock on the Voting Eligibility Date. If
the Trustee has not received instructions from a Participant as to voting of
shares within a specified time, then the Trustee shall not vote those shares. If
a Participant furnishes the Trustee with a signed vote direction card without
indicating a voting choice thereon, the Trustee shall vote Participant's shares
as recommended by management. In addition, each Participant shall have the right
to accept or reject any tender or exchange offer for shares of common stock. The
Trustee shall vote (or tender or exchange) all combined fractional shares of
Raytheon Common Stock to the extent possible in the same proportion as the
shares which have been voted (or tendered or exchanged) by each Participant. Any
instructions as to voting (or tender or exchange) received from an individual
Participant shall be held in confidence by the Trustee and shall not be divulged
to the Companies or to any officer or employee thereof or to any other person.
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11
ARTICLE V - VESTING
5.1 Vesting Status -- Each Participant shall have a Nonforfeitable
right to any amounts in the Participant's Account.
ARTICLE VI - WITHDRAWALS AND DISTRIBUTIONS
6.1 In-Service Withdrawal - Employee Account -- While in a Period of
Service, a Participant may withdraw assets from his or her Account as follows:
(a) all or a portion of the Participant's Employee Account upon attainment
of age 59 1/2 or
(b) a distributable amount (as defined in Treas. Reg. *1.401(k)-1(c)(2) on
account of a hardship as defined in the regulation. A distribution is made on
account of a hardship only if the distribution both is made on account of an
immediate and heavy financial need of the Participant and is necessary to
satisfy the financial need. The distributable amount is equal to the
Participant's total Elective Deferrals as of the date of distribution reduced by
the amount of previous distributions on account of hardship and increased by
that portion of income allocable to Elective Deferrals which was credited to the
Participant's Account as of December 31, 1988.
Withdrawals from the Employee Accounts of less than $250 will not be permitted.
Withdrawals will be based upon the value of the Account as of a date established
by the Administrator through the application of a uniform and equitable rule and
will be effected by telephone notice to Fidelity. Payment of the amount
withdrawn will be made as soon as reasonably practicable after the effective
date of the withdrawal. Withdrawals from Funds A, B, D and E, and such other
funds as may be established by the Administrator, will be made in cash;
withdrawals from Fund C will be made in either cash or stock (with cash for
fractional or unissued shares) as elected by the
Participant. Funds for the withdrawal will be taken on a pro rata basis against
the Participant's investment fund balances in the Participant's Employee
Account.
6.2 Documentation Required For Financial Hardship Withdrawals --
(a) A Participant requesting a withdrawal of the distributable amount of the
Participant's Employee Account due to reasons of immediate and heavy financial
need must submit such documentation or information in other form as required by
the Administrator and shall advise Fidelity by telephone notice or such other
means as established by the Administrator's rules then in effect of the
existence of an immediate and heavy financial need and the fact that the need
will be satisfied by the requested distribution.
(b) The Participant shall represent that this financial need cannot be satisfied
by any of the following sources: through reimbursement or compensation by
insurance or otherwise; by liquidation of the Participant's assets; by cessation
of Elective Deferrals under the Plan; or by other distributions or non-taxable
(at the time of the loan) loans currently available from plans maintained by the
Employer or by any other employer, or by borrowing from commercial sources on
reasonable commercial terms.
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12
(c) For purposes of Section 6.1, "immediate and heavy financial need" is limited
to financial need arising from the following specific causes: expenses for
medical care (as described in *213(d) of the Code) incurred by the Participant,
the Participant's spouse or any dependents (as defined in *152 of the Code) of
the Participant, or which are necessary for these persons to obtain medical care
described in *213(d) of the Code; costs directly related to the purchase of a
principal residence for the Participant (excluding mortgage payments); payment
of tuition and related educational expenses for the next twelve months of
post-secondary education for the Participant, or the Participant's spouse,
children, or dependents (as defined in *152 of the Code); to prevent the
eviction from or foreclosure on the Participant's principal residence; or any
other circumstance, as determined by the Administrator based upon all the
relevant facts, establishing substantial justification for the withdrawal.
6.3 Suspension of Elective Deferrals for Financial Hardship
Withdrawals.-- If a Participant's application for a hardship withdrawal is
approved and the withdrawal effected, Participant's Elective Deferrals will be
suspended for a period of one year from the date of withdrawal. Thereafter,
Elective Deferrals shall be in the same amount and with the same investment
options as in effect prior to the withdrawal unless notice by telephone or in
writing giving other instructions is received by Fidelity prior to the
expiration of the one-year period from the withdrawal.
6.4 In-Service Withdrawal - Rollover Contribution Account -- A
Participant may withdraw all or a portion of the Participant's Rollover
Contribution Account. Withdrawals will be based upon the value of the account as
of the date established by the Administrator through the application of a
uniform and equitable rule by telephone notice to Fidelity. Withdrawals will be
based upon the value of the Account as determined under Section 6.8. Payment of
the amount withdrawn will be made as soon as reasonably practicable after the
effective date of the withdrawal. Withdrawals from Funds A, B, D and E will be
made in cash. Withdrawals from Fund C will be made in cash or stock (with cash
for fractional or unissued shares) as elected by the Participant.
6.5 Redeposits Prohibited -- No amount withdrawn pursuant to Sections
6.1, 6.4 or 6.6 may be redeposited in the Plan.
6.6 Distribution --
(a) Distribution of the Participant's Account will be made upon the Retirement,
Disability (as defined in Section 14.13), death, Severance from Service (as
defined in Section 14.40) or Layoff (as defined in Section 14.24) of the
Participant; or, to an alternate payee, upon issuance of a Qualified Domestic
Relations Order (as defined in Section 414(p) of the Internal Revenue Code and
the Retirement Equity Act). In the event of the death of a Participant, the
distribution shall be made to the Participant's Beneficiary. The standard form
of distribution will be a lump sum distribution of the entire amount in the
Participant's Account (to which the Participant has a Nonforfeitable right)
which will be paid as soon as practicable following notification to the Benefits
and Services Department, Raytheon Company, Lexington, Massachusetts, of the
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13
Retirement, death, Disability or Severance from Service and a telephone request
by the Participant to Fidelity for the distribution. Distribution of the amounts
in said accounts in the funds designated in Funds A, B, D and E, and such other
funds as may be established by the Administrator, will be made in cash.
Distribution of any amount in said accounts in Fund C (Raytheon Company stock)
will be made in either cash or, if elected by the Participant or, in the case of
death, the Participant's Beneficiary, stock. Partial deferrals will not be
permitted. If there is no Beneficiary surviving a deceased Participant at the
time payment of a Participant's Account is to be made, such payment shall be
made in a lump sum to the person or persons in the first following class of
successive Beneficiaries surviving, any testamentary devise or bequest to the
contrary notwithstanding: the Participant's (a) spouse, (b) children and issue
of deceased children by right of representation, (c) parents, (d) brothers and
sisters and issue of deceased brothers and sisters by right of representation,
or (e) executors or administrators.
(b) In the event that upon a Participant's Severance from Service Date the
Participant has a Nonforfeitable right to an Account in the Plan which exceeds
Thirty-Five Hundred Dollars ($3,500), the Participant shall have the option of
not receiving an immediate distribution of the amount in his or her Account.
(c) Except as provided by Section 401(a)(9) of the Code as referenced in this
Section, benefits in the Plan will be distributed to each Participant not later
than the sixtieth (60th) day after the close of the Plan Year in which the
latest of the following events occurs:
(1) attainment by the Participant of Normal Retirement Age;
(2) the tenth (10th) anniversary of the date on which Participant commenced
participation in the Plan; or
(3) Participant's Severance from Service.
If the amount of the benefit payable to a Participant has not been
ascertained by the sixtieth (60th) day after the close of the Plan Year in which
the latest of the three events described in clauses (1), (2) and (3) above
occurred, or Participant cannot be located after reasonable efforts to do so,
then payment retroactive to said sixtieth (60th) day after the close of the Plan
Year in which the latest of the three events occurred may be made no later than
sixty (60) days after the later of the earliest date on which the amount of such
payment can be ascertained under the Plan or the earliest date on which the
Participant is located.
(d) A lump sum distribution of a Participant's Account will be made no later
than April 1 of the calendar year following the year in which the Participant
attains age 70 1/2.
(e) In the event amounts are transferred to this Plan from another plan
qualified under Section 401(a) of the Code (other than amounts described in
Section 3.6(b)), any distribution or withdrawal rights available to the
Participant under such other plan which are protected under Section 411(d)(6) of
the Code shall be available to the Participant under this Plan.
<PAGE>
14
6.7 Direct Rollovers -- Effective January 1, 1993, a distributee may
elect, at the time and in the manner prescribed by the Administrator, to have
any portion of an eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct rollover. For purposes
of this paragraph, the following terms shall have the following meanings:
(a) Eligible rollover distribution: An eligible rollover
distribution is any distribution of all or any portion of the balance to the
credit of the distributee, except that an eligible rollover distribution does
not include: any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or life
expectancy) of the distributee or the joint lives (or joint life expectancies)
of the distributee and the distributee's beneficiary, or for a specified period
of 10 years or more; any distribution to the extent such distribution is
required under Section 401(a)(9) of the Code; and the portion of any
distribution that is not includible in gross income.
(b) Eligible retirement plan: An eligible retirement plan is
an individual retirement account described in Section 408(a) of the Code, an
individual retirement annuity described in Section 408(b) of the Code, an
annuity plan described in Section 403(a) of the Code or a qualified trust
described in Section 401(a) of the Code that accepts the distributee's eligible
rollover distribution. However, in the case of an eligible rollover distribution
to the surviving spouse, the term is limited to an individual retirement account
or individual retirement annuity.
(c) Distributee: A distributee includes a Participant or
former Participant. In addition, the Participant's or former Participant's
surviving spouse and the Participant's spouse or former spouse who is the
alternate payee under a qualified domestic relations order, as defined in
Section 414(p) of the Code, are distributees with regard to the interest of the
spouse or former spouse.
(d) Direct Rollover: A direct rollover is a payment by
the Plan to the eligible retirement plan specified by the distributee.
6.8 Determination of Amount of Withdrawal or Distribution. In
determining the amount of any withdrawal or distribution hereunder, the
Participant's Account shall be valued as of the close of business on the
Valuation Date on which telephone notice is received; provided, however, that in
any case where the telephone notice is received after 4:00 p.m. Eastern Time
(daylight or standard, whichever is in effect on the date of the call), the
Account shall be valued as of the close of business on the next Valuation Date.
<PAGE>
15
ARTICLE VII - LOANS
7.1 Availability of Loans - Participants may borrow against all or a
portion of the balance in the Participant's Account subject to the limitations
set forth in this Article. Participants who have incurred a Severance from
Service will not be eligible for a Plan loan.
7.2 Minimum Amount of Loan - No loan of less than $500 will be
permitted.
7.3 Maximum Amount of Loan - No loan in excess of fifty percent (50%)
of the aggregate value of a Participant's Account balances will be permitted. In
addition, limits imposed by the Internal Revenue Code and any other requirements
of applicable statute or regulation will be applied. Under the current
requirements of the Internal Revenue Code, if the aggregate value of a
Participant's Account exceeds $20,000, the loan cannot exceed the lesser of
one-half (1/2) the Nonforfeitable aggregate value or $50,000 reduced by the
excess of (a) the highest outstanding balance of loans from the Plan during the
one-year period ending on the day before the date on which such loan was made
over (b) the outstanding balance of loans from the Plan on the date on which
such loan was made.
7.4 Effective Date of Loans -- Loans will be effective as
specified in the Administrator's rules then in effect.
7.5 Repayment Schedule -- The Participant may select a repayment
schedule of 1, 2, 3, 4 or 5 years. If the loan is used to acquire any dwelling
which, within a reasonable time is to be used (determined at the time the loan
is made) as the principal residence of the Participant, the repayment period may
be extended up to 15 years at the election of the Participant. All repayments
will be made through payroll deductions in accordance with the loan agreement
executed at the time the loan is made, except that, in the event of the sale of
all or a portion of the business of the Employer or one of the Companies, or
other unusual circumstances, the Administrator, through uniform and equitable
rules, may establish other means of repayment. The loan agreement will permit
repayment of the entire outstanding balance in one lump sum. The minimum
repayment amount per pay period is $10 for Participants paid weekly and $50 for
Participants paid monthly. The repayment schedule shall provide for
substantially level amortization of the loan.
7.6 Limit on Number of Loans -- No more than two loans may be
outstanding at any time.
7.7 Interest Rate -- The interest rate for a loan pursuant to this
Article will be equal to the prime rate published in The Wall Street Journal on
the first business day in June and December of each year. The rate published on
the first business day in June will apply to loans which are effective at any
time during the period July 1 through December 31 thereafter; the rate published
on the first business day of December will apply to loans which are effective at
any time during the period January 1 through June 30 thereafter.
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16
7.8 Effect Upon Participant's Employee Account -- Upon the granting of
a loan to a Participant by the Administrator, the allocations in the
Participant's Account to the respective investment funds will be reduced on a
pro rata basis and replaced by the loan balance which will be designated as an
asset in the Account. Such reduction shall be effected by reducing the
Participant's Accounts in the following sequence, with no reduction of the
succeeding Accounts until prior Accounts have been exhausted by the loan:
Employee Account and Rollover Contribution Account. Upon repayment of the
principal and interest, the loan balance will be reduced, the Participant
Accounts will be increased in reverse order in which they were exhausted by the
loan, and the loan payments will be allocated to the respective investment funds
in accordance with the investment election then in effect.
7.9 Effect of Severance From Service and Non-Payment -- In the event
that a loan remains outstanding upon Severance from Service of a Participant,
the Participant will be given the option of continuing to repay the outstanding
loan. In any case where payments on the outstanding loan are not made within 90
days of the Participant's Severance from Service Date, the amount of any unpaid
principal will be deducted from the Participant's Account and reported as a
distribution. If, as a result of Layoff or Authorized Leave of Absence, a
Participant, although still in a Period of Service, is not being compensated
through the Employer's payroll system, loan payments will be suspended until the
earliest of the first pay date after Participant returns to active employment
with the Employer, the Participant's Severance from Service Date, or the
expiration of twelve (12) months from the date of the suspension. In the event
the Participant does not return to active employment with the Employer, the
Participant will be given the option of continuing to repay the outstanding
loan. If the Participant fails to resume payments on the loan, the outstanding
loan will be reported as a taxable distribution. In no event, however, shall the
loan be deducted from the Participant's Account earlier than the date on which
the Participant (i) incurs a Severance from Service or (ii) attains age 59-1/2.
ARTICLE VIII - LIMITATIONS OF SECTION 415 OF THE CODE
8.1 Maximum Permissible Amount of a Participant's Annual Addition --
The total for any Limitation Year of the annual additions to a Participant's
Account under this Plan when added to the annual additions to a Participant's
account under any qualified defined contribution plan maintained by the Employer
shall not exceed the lesser of (i) twenty-five percent (25%) of total
compensation from the Employer, and (ii) $30,000 or, if greater, one-fourth of
the defined benefit dollar limitation set forth in Section 415(b)(1) of the Code
as in effect for the Limitation Year.
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17
For purposes of this Section 8.1, the term "annual addition" shall
mean, with respect to any Limitation Year, Elective Deferrals and Qualified
Nonelective Contributions, if any, to this Plan, plus the sum of the following
amounts allocable for such Plan Year to the Participant's accounts in all other
qualified plans maintained by the Employer in which he participates: (1)
employer contributions (including pre-tax contributions), (2) forfeitures which
have been reallocated to the Participant's account, (3) Participant after-tax
contributions; and (4) amounts described in Sections 415(l)(1) and 419A(d)(2) of
the Code.
For purposes of this Section 8.1, the term "compensation" shall mean
all amounts paid to an Employee for personal services actually rendered to the
Companies and Affiliates, including, but not limited to, wages, salary,
commissions, bonuses, overtime and other premium pay as specified in Reg.
*1.415-2(d)(2), but excluding deferred compensation, stock options, and other
distributions which receive special tax treatment as specified in Reg.
*1.415-2(d)(3).
8.2 Reduction of Annual Additions -- In the event it is determined that
the annual additions to a Participant's Account for any limitation year would be
in excess of the limitations of Section 8.1, such annual additions shall be
reduced to the extent necessary to bring it within such limitations. If, as a
result of a reasonable error in estimating a Participant's Eligible
Compensation, a reasonable error in determining the amount of Elective Deferrals
that may be made with respect to any Participant, or under other limited facts
and circumstances which the Internal Revenue Service finds justify the
availability of the remedies contained herein, the Administrator shall reduce
the annual additions which have been made to a Participant's Account to the
acceptable limit by the following procedures, in the following order:
(a) by returning to the Participant the excess Electiv
Deferrals (and any associated earnings) for the Limitation Year;
(b) to the extent the limitation is still exceeded, excess
annual additions in the Participant's Account (and associated earnings) shall be
used to reduce Elective Deferrals for the next Limitation Year (and succeeding
Limitation Years, as necessary) for that Participant if the Participant is
covered by the Plan at the end of such Limitation Year; and
<PAGE>
18
(c) in the event the Participant is not covered by the Plan at
the end of the Limitation Year, any excess annual additions which remain must,
as provided in Reg. *1.415-6(b)(6)(ii), be held unallocated in a suspense
account for the Limitation Year and reallocated in the next Limitation Year to
all of the remaining Participants in proportion to their Elective Deferrals in
such Plan Year.
8.3 Coordination with Limitation on Benefit from All Plans --
Notwithstanding any other provisions in this Plan to the contrary, in the case
of a Participant who also participates in any qualified defined benefit plan
which is maintained by the Employer (whether or not terminated), the sum of the
defined benefit plan fraction and the defined contribution plan fraction may not
exceed 1.0 for any Limitation Year. The defined benefit plan fraction for any
Limitation Year is a fraction, the numerator of which is the projected annual
benefit of the Participant under the plan (determined as of the close of the
Limitation Year); and the denominator of which is the lesser of (i) the product
of 1.25, multiplied by the dollar limitation applicable to defined benefit
plans, in effect under applicable law for such Limitation Year; or (ii) the
product of 1.4 multiplied by one hundred percent (100%) of the Participant's
average compensation for the three consecutive calendar years during which he
had the highest aggregate compensation from the Employer. The defined
contribution plan fraction for any Limitation Year is a fraction, the numerator
of which is the sum of the annual additions (as defined in Section 8.1) to the
Participant's Accounts as of the close of the Limitation Year; and the
denominator of which is the sum of the lesser of the following amounts
determined for the current Limitation Year and each prior Limitation Year: (i)
the product of 1.25 multiplied by the dollar limitation applicable to defined
contribution plans, in effect under applicable law for the Limitation Year; or
(ii) the product of 1.4 multiplied by 25% of such Participant's total
compensation for the Limitation Year. In the event that the limitation set forth
above is exceeded, adjustments shall be made in the defined benefit plan.
8.4 Effective Date -- This Article VIII shall be effective for
Limitation Years beginning on or after January 1, 1987.
ARTICLE IX - LIMITATIONS OF SECTION 416 OF THE CODE
9.1 General Rule -- In the event that the Plan becomes top heavy with
respect to a Plan Year commencing on or after January 1, 1988, the provisions of
this Article shall apply.
9.2 Definitions --
(a) Key Employee: Any Employee or former Employee (and the
Beneficiaries of such Employee) who at any time during the determination period
was an office of the Employer, an owner (or considered an owner under Section
415(c)(1)(A) of the Code) of one of the ten largest interests in the Employer if
such individual's compensation exceeds 150 percent of the dollar limitation
under Section 415(c)(1)(A) of the Code, a five percent (5%) owner of the
Employer, or a one percent (1%) owner of the Employer who has an annual
compensation of more than $150,000. The determination period of the Plan is the
Plan Year containing the determination date and the four (4) preceding Plan
Years. The determination of who is a Key Employee will be made in accordance
with Section 416(i)(1) of the Code and the regulations thereunder.
<PAGE>
19
(b) Non-Key Employee: Any Employee who is not a Key Employee.
(c) Top-Heavy Ratio:
(i) If the Employer maintains one or more defined benefit plans and the
Employer has never maintained any defined contribution plans (including any
simplified employee pension plan) which has covered or could cover a Participant
in this Plan, the Top-Heavy Ratio is a fraction, the numerator of which is the
sum of the present value of accrued benefits of all Key Employees as of the
determination date (including any part of any accrued benefit distributed in the
five-year period ending on the determination date), and the denominator of which
is the sum of all accrued benefits (including any part of any accrued benefit
distributed in the five-year period ending on the determination date) of all
Participants as of the determination date.
(ii) If the Employer maintains one or more defined contribution plans
(including any simplified employee pension plan) and the Employer maintains or
has maintained one or more defined benefit plans which have covered or could
cover a Participant in this Plan, the Top-Heavy Ratio is a fraction, the
numerator of which is the sum of account balances under the defined contribution
plans for all Key Employees and the present value of accrued benefits under the
defined benefit plans for all Key Employees, and the denominator of which is the
sum of the account balances under the defined contribution plans for all
Participants and the present value of accrued benefits under the defined benefit
plans for all Participants. Both the numerator and denominator of the Top-Heavy
Ratio are adjusted for any distribution of an account balance or an accrued
benefit made in the five-year period ending on the determination date and any
contribution due but unpaid as of the determination date.
(iii) For purposes of (i) and (ii) above, the value of account balances
and the present value of accrued benefits will be determined as of the most
recent valuation date that falls within or ends with the 12-month period ending
on the determination date. The account balances and accrued benefits of a
Participant who is not a Key Employee but who was a Key Employee in a prior year
will be disregarded. The calculation of the Top-Heavy Ratio, and the extent to
which distributions, rollovers, and transfers are taken into account will be
made in accordance with Section 416 of the Code and the regulations thereunder.
Deductible Employee contributions will not be taken into account for purposes of
computing the Top-Heavy Ratio. When aggregating plans, the value of account
balances and accrued benefits will be calculated with reference to the
determination dates that fall within the same calendar year. The accrued benefit
of a Participant other than a Key Employee shall be determined under (a) the
method, if any, that uniformly applies for accrual purposes under all defined
benefit plans maintained by the Employer, or (b) if there is no such method, as
if such benefit accrued not more rapidly than the slowest accrual rate permitted
under the fractional rule of Section 411(b)(1)(C) of the Code.
<PAGE>
20
(d) Permissive aggregation group: The required aggregation
group of plans plus any other plan or plans of the Employer which, when
considered as a group with the required aggregation group would continue to
satisfy the requirements of Sections 401(a)(4) and 410 of the Code.
(e) Required aggregation group: (i) Each qualified plan of the
Employer in which at least one Key Employee participates, and (ii) any other
qualified plan of the Employer which enables a plan described in (i) to meet the
requirements of Sections 401(a)(4) and 410 of the Code.
(f) Determination date: For any Plan Year subsequent to the
first Plan Year, the last day of the preceding Plan Year. For the first Plan
Year of the Plan, the last day of that year.
(g) Valuation date: The last day of each Plan Year.
(h) Present Value: Present Value shall be based only on the
interest rate used by the Administrator to determine compliance with the funding
requirements under the Retirement Act and the mortality rates specified on an
appropriate current unisex table.
9.3 Determination as to Whether the Plan is Top Heavy -- The
Administrator shall determine whether the Plan is top heavy within the meaning
of Section 416. The Plan shall be top heavy for any Plan Year beginning after
December 2, 1987, if, as of the last day of the preceding Plan Year (the
"determination date"), any of the following conditions exist:
(a) If the Top-Heavy Ratio for this Plan exceeds sixty percent
(60%) and this Plan is not part of any required aggregation group or permissive
aggregation group of plans;
(b) If this Plan is a part of a required aggregation group of
plans (but which is not part of a permissive aggregation group) and the
Top-Heavy Ratio for the group of plans exceeds sixty percent (60%); or
(c) If this Plan is a part of a required aggregation group of
plans and part of a permissive aggregation group and the Top-Heavy Ratio for the
permissive aggregation group exceeds sixty percent (60%).
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21
In determining whether the Plan is top heavy for Plan Years commencing
after December 31, 1988, the Account balance of a Participant who has not
performed an Hour of Service for the Employer at any time during the
five-consecutive-year period ending on the determination date shall be excluded
from the calculation of the Top Heavy Ratio.
9.4 Minimum Contribution -- For each Plan Year with respect to which
the Plan is top heavy, the minimum amount allocated under the Plan for the
benefit of each Participant who is a Non-Key Employee and who is otherwise
eligible for such an allocation shall be the lesser of:
(a) Three percent (3%) of the Non-Key Participant's
compensation (within the meaning of Section 415 of the Code) for the Plan Year,
or
(b) the Non-Key Participant's compensation (as defined in
Section 415 of the Code) times a percentage equal to the largest percentage of
such compensation (not exceeding $200,000, $150,000 for Plan Years beginning on
or after January 1, 1994) allocated to any Key Employee for the Plan Year under
this Plan and all other defined contribution plans in the same required
aggregation group. This clause (b) shall not apply to any plan required to be
included in an aggregation group if such plan enables a defined benefit plan
required to be included in such group to meet the requirements of Section
401(a)(4) or Section 410 of the Code.
This paragraph shall not apply to a Participant covered under a
qualified defined benefit plan maintained by the Employer if the Participant's
vested benefit thereunder satisfies the requirements of Section 416(c) of the
Code. Notwithstanding any other language herein, a Non-Key Eligible Employee may
not fail to receive a defined contribution minimum allocation because either (1)
said Eligible Employee was excluded from participation (or accrues no benefit)
merely because the Employee's compensation is less than the stated amount, or
(2) the Employee is excluded from participation (or accrues no benefit) merely
because of a failure to make Elective Deferrals.
ARTICLE X - THE TRUST FUND
10.1 Trust Agreement -- During the period in which this Plan remains in
existence, the Employer or any successor thereto shall maintain in effect a
Trust Agreement with a corporate trustee as Trustee, to hold, invest, and
distribute the Trust Fund in accordance with the terms of such Trust Agreement.
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22
10.2 Investment of Accounts -- The Trustee shall invest and reinvest
the Participant's Accounts in investment options as defined in Section 4.1 as
directed by the Administrator or its delegate in writing. The Administrator
shall issue such directions in accordance with the investment options selected
by the Participants which shall remain in force until altered in writing in
accordance with Sections 4.2 and 4.3.
10.3 Expenses -- Expenses of the Plan and Trust shall be paid from the
Trust.
ARTICLE XI - ADMINISTRATION OF THE PLAN
11.1 General Administration -- The general administration of the Plan
shall be the responsibility of Raytheon Company (or any successor thereto) which
shall be the Administrator and Named Fiduciary for purposes of the Retirement
Act. The Company shall have the authority, in its sole discretion, to construe
the terms of the Plan and to make determinations as to eligibility for benefits
and as to other issues within the "Responsibilities of the Administrator"
described in Article XI, Section 11.2. All such determinations of the Company
shall be conclusive and binding on all persons.
11.2 Responsibilities of the Administrator -- The Administrator shall
assign responsibility for performance of all necessary administrative duties,
including the following:
(a) Determination of all questions which may arise under the
Plan with respect to eligibility for participation and administration of
accounts, including without limitation questions with respect to membership,
vesting, loans, withdrawals, accounting, status of accounts, stock ownership and
voting rights, and any other issue requiring interpretation or application of
the Plan.
(b) Reference of appropriate issues to the Offices of the
Executive Vice President - Chief Financial Officer, and the Vice President -
Human Resources, of Raytheon Company, respectively, for advice and counsel.
(c) Establishment of procedures required by the Plan, such as
notification to Employees as to joining the Plan, selecting and changing
investment options, suspending deferrals, exercising voting rights in stock,
withdrawing and borrowing account balances, designation of beneficiaries,
election of method of distribution, and any other matters requiring a uniform
procedure.
(d) Submission of necessary amendments to supplement omissions
from the Plan or reconcile any inconsistency therein.
(e) Filing appropriate reports with the Government as required
by law.
(f) Appointment of a Trustee or Trustees and investment
managers.
(g) Review at appropriate intervals of the performance of the
Trustee and such investment managers as may have been designated.
(h) Appointment of such additional Fiduciaries as deemed
necessary for the effective administration of the Plan, such appointments to be
by written instrument.
<PAGE>
23
11.3 Liability for Acts of Other Fiduciaries -- Each Fiduciary shall be
responsible only for the duties allocated or delegated to said Fiduciary, and
other Fiduciaries shall not be liable for any breach of fiduciary responsibility
with respect to any act or omission of any other Fiduciary unless:
(a) The Fiduciary knowingly participates in or knowingly
attempts to conceal the act or omission of such other Fiduciary and knows that
such act or omission constitutes a breach of fiduciary responsibility by the
other Fiduciary;
(b) The Fiduciary has knowledge of a breach of fiduciary
responsibility by the other Fiduciary and has not made reasonable efforts under
the circumstances to remedy the breach; or
(c) The Fiduciary's own breach of his specific fiduciary
responsibilities has enabled another Fiduciary to commit a breach. No Fiduciary
shall be liable for any acts or omissions which occur prior to his assumption of
Fiduciary status or after his termination from such status.
11.4 Employment by Fiduciaries -- Any Fiduciary hereunder may employ,
with the written approval of the Administrator, one or more persons to render
service with regard to any responsibility which has been assigned to such
Fiduciary under the terms of the Plan including legal, tax, or investment
counsel and may delegate to one or more persons any administrative duties
(clerical or otherwise) hereunder.
11.5 Recordkeeping -- The Administrator shall keep or cause to be kept
any necessary data required for determining the account status of each
Participant. In compiling such information, the Administrator may rely upon its
employment records, including representations made by the Participant in the
employment application and subsequent documents submitted by the Participant to
the Employer. The Trustee shall be entitled to rely upon such information when
furnished by the Administrator or its delegate. Each Employee shall be required
to furnish the Administrator upon request and in such form as prescribed by the
Administrator, such personal information, affidavits and authorizations to
obtain information as the Administrator may deem appropriate for the proper
administration of the Plan, including but not limited to proof of the Employee's
date of birth and the date of birth of any person designated by a Participant as
a Beneficiary.
11.6 Claims Review Procedure -- The Administrator shall make all
determinations as to the right of any person to Accounts under the Plan. Any
such determination by the Administrator shall be made pursuant to the following
procedure:
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24
Step 1. Claims with respect to an Account should be filed by a claimant
as soon as practicable after claimant knows or should know that a dispute has
arisen with respect to an Account, but at least thirty (30) days prior to the
claimant's actual retirement date or, if applicable, within sixty (60) days
after the death, Disability or Severance from Service of the Participant whose
Account is at issue, by mailing a copy of the claim to the Benefits and Services
Department, Raytheon Company, 141 Spring Street, Lexington, Massachusetts 02173.
Step 2. In the event that a claim with respect to an Account is wholly
or partially denied by the Administrator, the Administrator shall, within ninety
(90) days following receipt of the claim, so advise the claimant in writing
setting forth: the specific reason or reasons for the denial; specific reference
to pertinent Plan provisions on which the denial is based; a description of any
additional material or information necessary for the claimant to perfect the
claim; an explanation as to why such material or information is necessary; and
an explanation of the Plan's claim review procedure.
Step 3. Within sixty (60) days following receipt of the denial of a
claim with respect to an Account, a claimant desiring to have the denial
appealed shall file a request for review with the Administrator by mailing a
copy thereof to the address shown in Step 1.
Step 4. Within thirty (30) days following receipt of a request for
review, the Administrator shall provide the claimant a further opportunity to
present his or her position. At the Administrator's discretion, such
presentation may be through an oral or written presentation. Prior to such
presentation, the claimant shall be permitted the opportunity to review
pertinent documents and to submit issues and comments in writing. Within a
reasonable time following presentation of the claimant's position, which usually
should not exceed thirty (30) days, the Administrator shall inform the claimant
in writing of the decision on review setting forth the reasons for such decision
and citing pertinent provisions in the Plan.
The Administrator is the fiduciary to whom the Plan grants full
discretion, with the advice of counsel, to interpret the Plan; to determine
whether a claimant is eligible for benefits; to decide the amount, form and
timing of benefits; and to resolve any other matter under the Plan which is
raised by a claimant or identified by the Administrator. All questions arising
from or in connection with the provisions of the Plan and its administration,
not herein provided to be determined by the Board of Directors, shall be
determined by the Administrator, and any determination so made shall be
conclusive and binding upon all persons affected thereby.
11.7 Indemnification of Directors and Employees -- The Companies shall
indemnify by insurance or otherwise any Fiduciary who is a director, officer or
employee of the Employer, his heirs and legal representatives, against all
liability and reasonable expense, including counsel fees, amounts paid in
settlement and amounts of judgments, fines or penalties, incurred or imposed
upon him in connection with any claim, action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of acts or omissions
in his capacity as a Fiduciary hereunder, provided that such act or omission is
not the result of gross negligence or willful misconduct. The Companies may
indemnify other Fiduciaries, their heirs and legal representatives, under the
circumstances, and subject to the limitations set forth in the preceding
sentence, if such indemnification is determined by the Board of Directors to be
in the best interests of the Companies.
<PAGE>
25
11.8 Immunity from Liability -- Except to the extent that Section
410(a) of the Retirement Act prohibits the granting of immunity to Fiduciaries
from liability for any responsibility, obligation, or duty imposed under Title
I, Subtitle B, Part 4, of said Act, an officer, employee, member of the Board of
Directors of the Employer or other person assigned responsibility under this
Plan shall be immune from any liability for any action or failure to act except
such action or failure to act which results from said officer's, Employee's,
Participant's or other person's own gross negligence or willful misconduct.
ARTICLE XII - AMENDMENT OR TERMINATION OF THE PLAN
12.1 Right to Amend or Terminate Plan -- Each of the Companies reserves
the right at any time or times, by action of the Chairman, the President, the
Treasurer or the Vice President, Human Resources of the Company, to modify,
amend or terminate the Plan in whole or in part as to its Employees, in which
event a written direction from an authorized officer, approving such
modification, amendment or termination shall be delivered to the Trustee and to
the other Companies whose Employees are covered by this Plan, provided, however,
no amendment to the Plan shall be made which shall:
(a) deprive any Participant of amounts allocated to his
Account prior to the date of the amendment;
(b) except as provided in Section 3.8, make it possible for
any part of the corpus or income of the Trust Fund to be used for or diverted to
purposes other than the exclusive benefit of the Participants or their
beneficiaries prior to the satisfaction of all liabilities with respect to such
Participant or their Beneficiaries;
(c) modify the vesting schedule and deprive a Participant of
his Nonforfeitable rights to amounts allocated to his account prior to the date
of the amendment. Further, if the vesting schedule of the Plan is amended, or
the Plan is amended to directly or indirectly affect a Nonforfeitable percentage
of a Participant's Account, each Participant with a Period of Service of at
least three years may elect, within a reasonable period after the adoption of
the amendment to have his nonforfeitable percentage computed under the Plan
without regard to such amendment. The period during which the election may be
made shall commence with the date the amendment is adopted or the change made
and shall end on the latest of:
(i) 60 days after the amendment is adopted;
(ii) 60 days after the amendment becomes effective, or
(iii) 60 days after the Participant is issued written notice of th
amendment;
(d) increase the duties of liabilities of the Trustee without
its consent.
<PAGE>
26
Notwithstanding the foregoing provisions of this Section or any other provisions
of this Plan, any modification or amendment of the Plan may be made
retroactively if necessary or appropriate to conform the Plan with, or to
satisfy the conditions of, the Retirement Act, the Code, or any other law,
governmental regulation or ruling.
Any termination, modification or amendment of the Plan shall be subject
to approval by the Board of Directors of the Company.
12.2 Maintenance of Plan -- The Company has established the Plan with
the bona fide intention and expectation that it will continue the Plan
indefinitely, but the Company is not and shall not be under any obligation or
liability whatsoever to maintain the Plan for any given length of time.
12.3 Termination of Plan and Trust -- The Plan and Trust hereby created
shall terminate upon the occurrence of any of the following events:
(a) Delivery to the Trustee of a notice of termination
executed by the Company specifying the date as of which the Plan and Trust shall
terminate;
(b) Adjudication of the Company as bankrupt or general
assignment by the Company to or for the benefit of creditors or dissolution of
the Company;
In the event of the complete termination of this Plan (but a rescission
under Section 13.2 for failure to qualify initially is not such a termination),
the rights of each Participant to the amounts then credited to his or her
Account shall be Nonforfeitable. In the event of the partial termination of this
Plan, the rights of each Employee (as to whom the Plan is considered terminated)
to the amounts then credited to his or her Account, shall be Nonforfeitable.
Whether or not there is a complete or partial termination of this Plan shall be
determined under the regulations promulgated pursuant to the Internal Revenue
Code. To the extent this paragraph is inconsistent with any provisions contained
elsewhere in this Plan or in the Trust which forms a part of this Plan, this
paragraph shall govern. Upon such termination of the Plan and Trust, after
payment of all expenses and proportional adjustment of accounts to reflect such
expenses, fund losses or profits, and reallocations to the date of termination,
each Participant or former Participant shall, subject to the requirements of
Section 401(k)(10) of the Code and Reg. * 1.401(k)-1(d)(3), be entitled to
receive any amounts then credited to his or her Account in the Trust Fund. The
Trustee may make payments in cash or, to the extent permitted by Section 6.6, in
stock.
<PAGE>
27
ARTICLE XIII - ADDITIONAL PROVISIONS
13.1 Effect of Merger, Consolidation or Transfer -- In the event of any
merger or consolidation with or transfer of assets or liabilities to any other
plan or to this Plan, each Participant of the Plan shall be entitled to a
benefit immediately after the merger, consolidation or transfer, which is equal
to or greater than the benefit he or she would have been entitled to receive
immediately before the merger, consolidation or transfer (if the Plan had been
terminated).
13.2 Necessity of Initial Qualification -- This Plan is established
with the intent that it shall qualify under Sections 401(a) and 401(k) of the
Code as that section exists at the time the Plan is established. If the Internal
Revenue Service determines that the Plan initially fails to meet those
requirements, then within thirty (30) days after the date of such determination
all of the vested assets of the Trust Fund held for the benefit of Participants
and their beneficiaries shall be distributed equitably among the contributors to
the Plan in proportion to their contributions, and the Plan shall be considered
to be rescinded and of no force or effect, unless such inadequacy is removed by
a retroactive amendment pursuant to the Code.
13.3 Limitation of Assignment -- No account under the Plan shall be
subject in any manner to attachment, anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, or the vesting of rights in any
person by operation of law or otherwise except as provided under this Plan,
including but not limited to the Trustee or Receiver in Bankruptcy, and any
attempt so to anticipate, alienate, sell, transfer, assign, encumber or charge
the same shall be void, nor shall any such benefit be in any way liable for or
subject to the debts, contracts, liabilities, engagements or torts of any person
entitled to such benefit. If any Participant is adjudicated bankrupt, or
attempts to anticipate, alienate, sell, transfer, assign, pledge, encumber or
charge any benefit under the Plan, then such benefit shall, in the discretion of
the Administrator, cease and terminate and in that event the Trustee shall hold
or apply the same or any part thereof to or for the benefit of such Participant
in such manner as the Administrator may direct. Notwithstanding the foregoing,
the Administrator is authorized to comply with a domestic relations order
determined by it to be a qualified domestic relations order as defined in
Section 414(p) of the Code. A distribution may be made to an alternate payee
under a qualified domestic relations order in the form of a lump sum payment at
the time specified in such order, regardless of any restrictions on the
commencement of the distribution that then may apply to the Participant to whom
the order relates.
13.4 Limitation of Rights of Employees -- This Plan is strictly a
voluntary undertaking on the part of the Companies and shall not be deemed to
constitute a contract between any of the Companies and any Employee, or to be a
consideration for, or an inducement to, or a condition of the employment of any
Employee. Nothing contained in the Plan shall be deemed to give any Employee the
right to be retained in the service of any of the Companies or shall interfere
with the right of any of the Companies to discharge or otherwise terminate the
employment of any Employee of the respective company at any time. No Employee
shall be entitled to any right or claim hereunder except to the extent such
right is specifically fixed under the terms of the Plan.
<PAGE>
28
13.5 Construction -- The Plan shall be construed, regulated, and
administered under the laws of the Commonwealth of Massachusetts, except to the
extent that the Retirement Act otherwise requires. In the event that any
provision of this Plan is inconsistent with any provision in the Retirement Act,
the provision in the Retirement Act shall be deemed to be controlling.
13.6 Merger of Raytheon Subsidiary Savings and Investment Plan --
Effective as of December 31, 1994, or such earlier date as is determined to be
administratively feasible (the "Merger Date"), the Raytheon Subsidiary Savings
and Investment Plan shall be merged into this Plan. All assets held pursuant to
the Raytheon Subsidiary Savings and Investment Plan shall be transferred to the
Trustee, such transfer to be effective as of the Merger Date. Amounts held in
the various investment accounts under the Raytheon Subsidiary Savings and
Investment Plan and Trust shall be transferred to the investment accounts under
the Trust in accordance with procedures established by the Administrator. Upon
such transfer, the assets of the Raytheon Subsidiary Savings and Investment Plan
shall become assets of this Plan for all purposes hereunder, effective as of the
Merger Date, and this Plan shall assume all the liabilities of the Raytheon
Subsidiary Savings and Investment Plan, and benefits shall thereafter be
allocated and paid pursuant to the provisions of this Plan. All participants in
the Raytheon Subsidiary Savings and Investment Plan shall remain fully vested in
their accounts which are transferred to this Plan. All withdrawal and
distribution options under the Raytheon Subsidiary Savings and Investment Plan
shall be made available under this Plan with respect to the transferred accounts
to the extent required by Section 411(d)(6) of the Code. Any amendments to this
Plan which are effective prior to January 1, 1994 shall be considered as
amendments to the Raytheon Subsidiary Savings and Investment Plan as well.
13.7 Transfer of Assets to Raytheon Savings and Investment Plan for
Specified Hourly Payroll Employees -- Effective as of December 5, 1994, the
account balances of those Participants who are employed by Amana Refrigeration,
Inc. in the unit represented by Local 2385, International Association of
Machinists and Aerospace Workers, at Amana's plant in Fayetteville, Tennessee
(the "Transferred Accounts") shall be transferred to the Raytheon Savings and
Investment Plan for Specified Hourly Payroll Employees. Plan assets equal to the
Transferred Accounts shall be transferred to the trustee under the Raytheon
Savings and Investment Plan for Specified Hourly Payroll Employees, such
transfer to be effective as of December 5, 1994. Upon such transfer, this Plan
shall cease to have any liability for payment of benefits equal to the
Transferred Accounts.
ARTICLE XIV - DEFINITIONS
The following terms have the meaning specified below unless the context
indicates otherwise:
14.1 "Account" means the entire interest of a Participant in the Trust
Fund and shall consist of an Employee Account and, if applicable, a Rollover
Contribution Account.
14.2 "Administrator" means Raytheon Company.
<PAGE>
29
14.3 "Affiliate" means a trade or business which together with any of
the Companies is a member of (i) a controlled group of corporations within the
meaning of Section 414(b) of the Code; (ii) a group of trades or businesses
(whether or not incorporated) under common control as defined in Section 414(c)
of the Code, or (iii) an affiliated service group as defined in Section 414(m)
of the Code, or which is an entity otherwise required to be aggregated with the
Companies pursuant to Section 414(o) of the Code. For purposes of Article VIII,
the determination of controlled groups of corporations and trades or businesses
under common control shall be made after taking into account the modification
required under Section 415(h) of the Code. This section shall be effective as of
January 1, 1987.
14.4 "Authorized Leave of Absence" means an absence approved by the
Companies on a uniform and nondiscriminatory basis not exceeding one (1) year
for any of the following reasons: illness of Employee or relative, death of
relative, education of Employee, or personal or family business of an
extraordinary nature, provided in each case that the Employee returns to the
service of the Companies within the time period specified by the Companies.
14.5 "Authorized Military Leave of Absence" means any absence due to
service in the Armed Forces of the United States, upon completion of which the
Employee is entitled under any applicable Federal law to reemployment at the
termination of such military service, provided that he returns to the service of
the Companies within the period provided for by such applicable Federal law or
such further period as may be established by the Administrator. As used in this
paragraph, the term "Armed Forces of the United States" excludes the Merchant
Marine.
14.6 "Beneficiary" means the person designated by the Participant to
receive the value of his Account in the event of his death; provided, however,
that if a Participant with a spouse designates a Beneficiary other than his
spouse, said designation shall not take effect unless the spouse consents in
writing to such designation and said spousal consent acknowledges the effect of
said designation and is witnessed by a representative of the Plan or a notary
public. Said spousal consent shall be effective only with respect to the spouse
granting such consent, and shall not be required if the Participant can
establish that there is no spouse, that the spouse cannot be located, or that
other conditions exist as may be prescribed by regulations issued by the
Secretary of the Treasury. If there is no Beneficiary designated by the
Participant or surviving at the death of the Participant, payment of his Account
shall be made in accordance with Section 6.6(a). Subject to the foregoing, a
Participant may designate a new beneficiary at any time by filing with the
Administrator a written request for such change on a form prescribed by the
Administrator. Such change shall become effective only upon receipt of the form
by the Administrator, but upon such receipt of the change shall relate back to
and take effect as of the date the Participant signed such request, whether or
not the Participant is living at the time of such receipt, provided, however,
that neither the Trustee nor the Administrator shall be liable by reason of any
payment of the Participant's Account made before receipt of such form.
14.7 "Board of Directors" means the Board of Directors of Raytheon
Company.
14.8 "Business Day" means a day on which Fidelity is open for
general business.
14.9 "Code" means the Internal Revenue Code of 1986, as amended.
14.10 "Company" means Raytheon Company.
<PAGE>
30
14.11 "Companies" means the Company and any Subsidiary of the Company
which elects through an authorized officer to participate in the Plan on account
of its Employees, provided that participation in the Plan by such a Subsidiary
is approved by the Board of Directors or an authorized officer of the Company,
but shall not include any Division, Operation or similar cohesive group of a
participating Subsidiary excluded by the Board of Directors or an authorized
officer of the Subsidiary and the Board of Directors or an authorized officer of
the Company.
14.12 "Covered Unit" means a unit designated by the Company and a
participating Company as a unit, the employees in which are eligible to
participate in this Plan.
14.13 "Designated Hourly or Salaried Payroll" means an hourly or
salaried payroll or portion thereof, processed in the United States, of one of
the Companies which is designated in writing by the Administrator in accordance
with nondiscriminatory and uniform rules as a payroll the Employees on which are
eligible to participate in this Plan.
14.14 "Disability" means that the Participant is totally and
permanently disabled by bodily injury or disease so as to be prevented from
engaging in any occupation for compensation or profit. The determination of
disability shall be made by the Administrator with the aid of competent medical
advice. It shall be based on such evidence as the Administrator deems necessary
to establish disability or the continuation thereof.
14.15 "Elective Deferral" means a voluntary reduction of Participant's
compensation in accordance with a written direction to the Administrator.
14.16 "Eligible Compensation" means the base pay, supervisory
differentials, shift premiums and sales commissions, excluding all other
earnings from any source. Effective for Plan Years beginning on or after January
1, 1989 and prior to December 31, 1993, in no event shall the amount of Eligible
Compensation taken into account under the Plan for any Plan Year exceed $200,000
(or such larger amount as the Secretary of the Treasury may determine for such
Plan Year under Section 401(a)(17) of the Code). Effective for Plan Years
beginning on or after January 1, 1994, in no event shall the amount of Eligible
Compensation taken into account under the Plan for any Plan Year exceed $150,000
(or such larger amount as the Secretary of the Treasury may determine for such
Plan Year under Section 401(a)(17) of the Code). For purposes of this limitation
only, in determining compensation the rules of Section 414(q)(6) of the Code
shall apply, except that in applying such rules, the term "family" shall include
only the spouse of the Participant and any lineal descendants of the Participant
who have not attained age 19 before the close of the Plan Year.
14.17 "Eligible Employee" means any Employee on a U.S. based Designated
Hourly or Salaried Payroll in a Covered Unit of one of the Companies, excluding
Employees in cooperative studies and intern programs and, effective January 1,
1987, a person who is a Leased Employee.
<PAGE>
31
14.18 "Employee" means any person performing compensated services
for the Employer who meets the definition of "Employee" for income tax
withholding purposes under Treas. Regs. 31.3401(c)-1 and any person who is a
Leased Employee. This section shall be effective as of January 1, 1987.
14.19 "Employee Account" means that portion of Participant's Account
which is attributable to Elective Deferrals, adjustments for withdrawals and
distributions, and the earnings and losses attributable thereto.
14.20 "Employer" means Raytheon Company and any Affiliates thereof.
14.21 "Employment Commencement Date" is the date on which the Employee
first performs an Hour of Service with the Employer.
14.22 "Enrollment Agreement" means a salary reduction agreement
pursuant to which an Eligible Employee voluntarily joins the Plan and authorizes
deferral of a portion of the Participant's Eligible Compensation.
14.23 "Fidelity" means Fidelity Investments, the recordkeeper for
the Plan.
14.24 "Fiduciary" means a named fiduciary and any other person or group
of persons who assumes a fiduciary responsibility within the meaning of the
Retirement Act under this Plan whether by expressed delegation or otherwise but
only with respect to the specific responsibilities of each for the
administration of the Plan and Trust Fund.
14.25 "Higher Paid Eligible Employee" means an individual described in
Section 414(q) of the Code, after giving effect to subsection (12) thereof, and
any regulation, notice or other guidance issued by the Internal Revenue Service
thereunder. The determination of whether an individual is a Higher Paid Eligible
Employee may be made by the Administrator on the basis of any elective provision
permitted under such regulation, notice or other guidance. In general, an
Employee will be considered a Higher Paid Eligible Employee if such individual:
(a) was a five percent owner as defined in Section
416(i)(1)(iii) of the Code at any time during the current or preceding Plan
Year;
(b) received compensation in excess of $50,000 during the
current or preceding Plan Year (adjusted annually for increases in the cost of
living in accordance with Section 415(d) of the Code); or
(c) was at any time an officer within the meaning of Section
416(i) of the Code during the preceding Plan Year, and who received compensation
in the current or preceding Plan Year greater than 50 percent of the dollar
limitation in effect under Section 415(b)(1)(A) of the Code for such Plan Year.
Notwithstanding the foregoing, no more than 50 or, if lesser, the greater of 3
employees or 10 percent of the Employees shall be treated as officers.
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(d) An Employee who is not described in paragraph (b) or (c)
above for the preceding Plan Year shall not be treated as described in paragraph
(b) or (c) unless such Employee is one of the 100 Employees who receive the most
compensation from the Employer during the Plan Year.
(e) A former Employee shall be treated as a Higher Paid
Eligible Employee if such former Employee had a separation year prior to the
Plan Year and was a Higher Paid Eligible Employee for either (1) such Employee's
separation year or (2) any Plan Year ending on or after the Employee's 55th
birthday.
A separation year is the Plan Year in which the Employee
separates from service.
(f) Notwithstanding anything to the contrary in this Plan,
Sections 414(b), (c), (m), (n), and (o) of the Code are applied prior to
determining whether an Employee is a High Paid Eligible Employee.
(g) "Non-Higher Paid Eligible Employee" shall mean an Employee
who is neither a Higher Paid Eligible Employee nor a family member (within the
meaning of Section 414(q)(6) of the Code).
(h) "Compensation" shall mean the Employee's wages which are
required to be reported on IRS Form W-2, increased by any Elective Deferrals
made by the Companies to the Plan on behalf of the Employee and any pre-tax
elective contributions made by the Companies which are excludible from the
Employee's income under Section 125 of the Code.
14.26 "Hour of Service" --
(a) "Hour of Service" means an hour with respect to which any
Employee is paid, or entitled to payment, for the performance of duties for the
Employer during the applicable computation period.
(b) "Hour of Service" shall include an hour for which the
Employee is entitled to credit under subparagraph (a) hereof as a result of
employment with a Division, Operation or similar cohesive group of the Employer
excluded from participation in the Plan.
(c) To the extent applicable, the rules set forth in 29 CFR **
2530.200b-2(b) and (c) for computing an "Hour of Service" are incorporated
herein by reference.
14.27 "Layoff" means an involuntary interruption of service due to
reduction of work force with the possibility of recall to employment when
conditions warrant.
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14.28 "Leased Employee" means any person (other than an Employee) who,
pursuant to an agreement between the Employer and any other person, has
performed services for the Employer (or any related person as provided in
Section 414(n)(6) of the Code) on a substantially full time basis for a period
of at least one year and such services are of the type historically performed by
employees in the business field of the Employer. Leased Employees are not
eligible to participate in the Plan. Notwithstanding the foregoing, if such
"Leased Employees" constitute less than 20% of the nonhighly compensated
workforce of the Employer within the meaning of Section 414(n)(5)(C)(ii) of the
Code, the term "Employee" shall not include Leased Employees covered by a plan
described in Section 414(n)(5) of the Code. This section shall be effective
January 1, 1987.
14.29 "Limitation Year" means the calendar year or any other
12-consecutive-month period adopted for all qualified deferred compensation
plans of the Company pursuant to a written resolution adopted by the Company.
14.30 "Nonforfeitable" means an unconditional right to an Account
balance or portion thereof determined as of the applicable date of determination
under this Plan.
14.31 "Normal Retirement Age" means the Participant's sixty-fifth
(65th) birthday.
14.32 "Participant" means an individual who is enrolled in the Plan
pursuant to Article III and has not withdrawn the entire amount of his or her
Account.
14.33 "Pay Period" means a scheduled period for payment of wages or
salaries.
14.34 "Period of Participation" means that portion of a Period of
Service during which the Eligible Employee was a Participant, and had an Account
in the Plan. For the purpse of determining a Period of Participation,
participation in the Raytheon Savings and Investment Plan and the Raytheon
Savings and Investment Plan for Specified Hourly Payroll Employees shall be
considered as participation in this Plan.
14.35 "Period of Service" means the period of time beginning on the
Employee's Employment Commencement Date or Reemployment Commencement Date,
whichever is applicable, and ending on the Employee's Severance from Service
Date.
14.36 "Period of Severance" means the period of time beginning on the
Employee's Severance from Service Date and ending on the Employee's Reemployment
Commencement Date.
14.37 "Plan" means the Raytheon Employee Savings and Investment Plan as
amended from time to time.
14.38 "Plan Year" means a calendar year, or a portion thereof occurring
prior to the termination of the Plan.
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14.39 "Qualified Non-Elective Contribution Account" means that portion
of a Participant's Account which is attributable to qualified non-elective
contributions received pursuant to Sections 3.8 and 3.9, adjustments for
withdrawals and distributions, and the earnings and losses attributable thereto.
14.40 "Reemployment Commencement Date" means the first date on which
the Employee performs an Hour of Service following a Period of Severance which
is excluded under Section 2.5 in determining whether a Participant has completed
the required Period of Service for eligibility to participate in the Plan.
14.41 "Retirement" means a Severance from Service when the Participant
has either attained age 55 and completed a Period of Service of at least ten
(10) years or has attained Normal Retirement Age.
14.42 "Retirement Act" means the Employee Retirement Income Security
Act of 1974, including any amendments thereto.
14.43 "Rollover Contribution Account" means that portion of a
Participant's Account which is attributable to rollover contributions received
pursuant to Section 3.6, adjustments for withdrawals and distributions, and the
earnings and losses attributable thereto.
14.44 "Salaried Payrolls" means the nonexempt salaried and the exempt
salaried payrolls which are processed in the United States.
14.45 "Severance from Service" means the termination of employment by
reason of quit, Retirement, discharge, death or failure to return from Layoff,
Authorized Leave of Absence, Authorized Military Leave of Absence or Disability,
or, if designated by the Administrator pursuant to subsection 14.40(b) below,
layoff as the result of a permanent plant closing.
14.46 "Severance from Service Date" means the earlier of:
(a) the date on which an Employee quits, retires, is
discharged, or dies; or
(b) except as provided in paragraphs (c), (d) and (e) hereof,
the first anniversary of the first date of a period during which an Employee is
absent for any reason other than quit, retirement, discharge or death, provided
that, on an equitable and uniform basis, the Administrator may determine that,
in the case of a layoff as the result of a permanent plant closing, the
Administrator may designate the date of layoff or other appropriate date prior
to the first anniversary of the first date of absence as the Severance from
Service Date; or
(c) in the case of an Authorized Military Leave of Absence
from which the Employee does not return prior to expiration of recall rights,
"Severance from Service Date" means the first day of absence because of the
leave; or
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(d) in the case of an absence due to Disability, "Severance
from Service Date" means the earlier of the first anniversary of the first day
of absence because of the Disability or the date of termination of the
Disability; or
(e) in the case of an Employee who is discharged or quits (i)
by reason of the pregnancy of the Employee, (ii) by reason of the birth of a
child to the Employee, (iii) by reason of the placement of a child with the
Employee in connection with the adoption of such child by the Employee or (iv)
for purposes of caring for such child for a period beginning immediately
following such birth or placement, "Severance from Service Date," for the sole
purpose of determining the length of a Period of Service, shall mean the first
anniversary of the quit or discharge; or
(f) in the case of an Employee who is absent from service
beyond the first anniversary of the first day of absence (i) by reason of the
pregnancy of the Employee, (ii) by reason of the birth of a child to the
Employee, (iii) by reason of the placement of a child with the Employee in
connection with the adoption of such child by the Employee or (iv) for purposes
of caring for such child for a period beginning immediately following such birth
or placement, the Severance from Service Date shall be the second anniversary of
the first day of such absence. The period between the first and second
anniversaries of the first day of absence is neither a Period of Service nor a
Period of Severance.
14.47 "Subsidiary" means any corporation designated by the Board of
Directors as a Subsidiary, provided that for the purposes of the Plan no
corporation shall be considered a Subsidiary during any period when less than
fifty percent (50%) of its outstanding voting stock is beneficially owned by the
Company.
14.48 "Surviving Spouse" means a lawful spouse surviving the
Participant as of the date of Participant's death.
14.49 "Trust Agreement" means the agreement between the Company and the
Trustee, and any successor agreement made and entered into for the establishment
of a trust fund of all contributions which may be made to the Trustee under the
Plan.
14.50 "Trustee" means the Trustee and any successor trustees under
the Trust Agreement.
14.51 "Trust Fund" means the cash, securities, and other property held
by the Trustee for the purposes of the Plan.
14.52 "Valuation Date" means each day on which Fidelity is open for
general business.
Words used in either the masculine or feminine gender shall be read and
construed so as to apply to both genders where the context so warrants. Words
used in the singular shall be read and construed in the plural where they so
apply.
