-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DYQPCT+vr2GHU4cUHtZE7MV6480hHZ/4H/PoSKCqgQQzW1ImHqiHkPnGDfbns+sA JTJARWEcYMIIzrO5UMIeNw== 0001047122-98-000015.txt : 19980701 0001047122-98-000015.hdr.sgml : 19980701 ACCESSION NUMBER: 0001047122-98-000015 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 22 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980630 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: RAYTHEON CO/ CENTRAL INDEX KEY: 0001047122 STANDARD INDUSTRIAL CLASSIFICATION: SEARCH, DETECTION, NAVIGATION, GUIDANCE, AERONAUTICAL SYS [3812] IRS NUMBER: 951778500 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 001-13699 FILM NUMBER: 98658209 BUSINESS ADDRESS: STREET 1: 141 SPRING STREET STREET 2: C/O RAYTHEON CO CITY: LEXINGTON STATE: MA ZIP: 02173 BUSINESS PHONE: 7818626600 MAIL ADDRESS: STREET 1: 141 SPRING STREET STREET 2: BLDG CO1/MS A114 CITY: LEXINGTON STATE: MA ZIP: 02173 FORMER COMPANY: FORMER CONFORMED NAME: HE HOLDINGS INC DATE OF NAME CHANGE: 19971001 10-K/A 1 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A- No.1 /X/ Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 1997. / / Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from............... to .............. Commission File Number 1-13699 RAYTHEON COMPANY (Exact Name of Registrant as Specified in its Charter) DELAWARE 95-1778500 (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.) 141 SPRING STREET, LEXINGTON, MASSACHUSETTS 02173 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (781) 862-6600 Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which Registered Class A Common Stock, $.01 par value New York Stock Exchange Class B Common Stock, $.01 par value Chicago Stock Exchange Series A Junior Participating Preferred Pacific Exchange Stock purchase rights Securities registered pursuant to Section 12(g) of the Act: NONE Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes .X. No ... Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] 2 The aggregate market value of the voting stock held by non-affiliates of the Registrant, as of February 22, 1998, was approximately $18,648,013,310. For purposes of this disclosure, non-affiliates are deemed to be all persons other than members of the Board of Directors of the Registrant. Number of shares of Common Stock outstanding as of February 22, 1998: 338,811,777, consisting of 102,630,503 shares of Class A Common Stock and 236,181,274 shares of Class B Common Stock. Documents incorporated by reference and made a part of this Form 10-K: Portions of Raytheon's Annual Report to Stockholders Part I, Part II, Part IV for the fiscal year ended December 31, 1997 Portions of the Proxy Statement for Raytheon's Part III 1998 Annual Meeting which will be filed with the Commission within 120 days after the close of Raytheon's fiscal year The sole purpose of this Form 10-K/A is to file Annual Reports for the Registrant's various savings and investment plans. Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized. RAYTHEON COMPANY (REGISTRANT) By: /s/ Thomas D. Hyde Thomas D. Hyde Senior Vice President and General Counsel Date: June 30, 1998 EX-99 2 1 Exhibit Index Exhibit No. Description of Documents 99.1 Annual Report for the Raytheon Savings and Investment Plan. 99.1a Consent of Independent Accountants 99.1b Raytheon Savings and Investment Plan, heretofore filed as an exhibit to the Company's S-8 Registration Statement No. 333-56117 on June 5, 1998, is hereby incorporated by reference. 99.2 Annual Report for the Raytheon Savings and Investment Plan for Specified Hourly Payroll Employees. 99.2a Consent of Independent Accountants 99.2b Raytheon Savings and Investment Plan for Specified Hourly Payroll Employees, heretofore filed as an exhibit to the Company's S-8 Registration Statement No. 333-56117 on June 5, 1998, is hereby incorporated by reference. 99.3 Annual Report for the Raytheon Employee Savings and Investment Plan. 99.3a Consent of Independent Accountants 99.3b Raytheon Employee Savings and Investment Plan, heretofore filed as an exhibit to the Company's S-8 Registration Statement No. 333-56117 on June 5, 1998, is hereby incorporated by reference. 99.4 Annual Report for the Raytheon Savings and Investment Plan for Puerto Rico Based Employees. 99.4a Consent of Independent Accountants 99.4b Raytheon Savings and Investment Plan for Puerto Rico Based Employees, heretofore filed as an exhibit to the Company's S-8 Registration Statement No. 333-56117 on June 5, 1998, is hereby incorporated by reference. 99.5 Annual Report for the E-Systems, Inc. Employee Savings Plan. 99.5a Consent of Independent Accountants 99.5b E-Systems, Inc. Employee Savings Plan, heretofore filed as an exhibit to the Company's S-8 Registration Statement No. 333-56117 on June 5, 1998, is hereby incorporated by reference. 99.6 Annual Report for the Raytheon TI Systems Savings Plan. 99.6a Consent of Independent Accountants 99.6b Raytheon TI Systems Savings Plan, heretofore filed as an exhibit to the Company's S-8 Registration Statement No. 333-56117 on June 5, 1998, is hereby incorporated by reference. 2 99.7 Annual Report for the Raytheon Salaried Savings and Investment Plan. 99.7a Consent of Independent Accountants 99.7b Raytheon Salaried Savings and Investment Plan, heretofore filed as an exhibit to the Company's S-8 Registration Statement No. 333-56117 on June 5, 1998, is hereby incorporated by reference. 99.8 Annual Report for the Raytheon California Hourly Savings and Investment Plan. 99.8a Consent of Independent Accountants 99.8b Raytheon California Hourly Savings and Investment Plan, heretofore filed as an exhibit to the Company's S-8 Registration Statement No. 333-56117 on June 5, 1998, is hereby incorporated by reference. 99.9 Annual Report for the Raytheon Tucson Bargaining Savings and Investment Plan. 99.9a Consent of Independent Accountants 99.9b Raytheon Tucson Bargaining Savings and Investment Plan, heretofore filed as an exhibit to the Company's S-8 Registration Statement No. 333-56117 on June 5, 1998, is hereby incorporated by reference. 99.10 Annual Report for the Raytheon Savings and Investment Plan (10014). 99.10a Consent of Independent Accountants 99.10b Raytheon Savings and Investment Plan (10014), heretofore filed as an exhibit to the Company's S-8 Registration Statement No. 333-56117 on June 5, 1998, is hereby incorporated by reference. EX-99 3 1 EXHIBIT 99.1 RAYTHEON SAVINGS AND INVESTMENT PLAN FINANCIAL STATEMENTS TO ACCOMPANY 1997 FORM 5500 ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN UNDER ERISA OF 1974 FOR THE YEAR ENDED DECEMBER 31, 1997 The supplemental schedules required to accompany the Plan's Form 5500 are not required since the Plan's assets are held in a Master Trust. Accordingly, detailed financial information, including the supplemental schedules, must be filed separately with the Department of Labor by the plan administrator. REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Raytheon Company: We have audited the accompanying statements of net assets available for plan benefits of the Raytheon Savings and Investment Plan (the "Plan") as of December 31, 1997 and 1996, and the related statement of changes in net assets available for plan benefits for the year ended December 31, 1997. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Plan as of December 31, 1997 and 1996, and the changes in net assets available for plan benefits for the year ended December 31, 1997 in conformity with generally accepted accounting principles. Coopers & Lybrand LLP Boston, Massachusetts May 29, 1998 2 RAYTHEON SAVINGS AND INVESTMENT PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS as of December 31, 1997 and 1996 1997 1996 Assets: Master trust investments: At contract value (Notes B, E and H) $ 772,455,041 $ 772,729,672 At fair value (Notes B, F and H) 1,887,852,039 1,476,625,144 -------------- -------------- 2,660,307,080 2,249,354,816 -------------- -------------- Receivables: Accrued investment income and other receivables 3,765,409 931,039 Cash and cash equivalents 18,482,006 21,398,335 -------------- -------------- Total assets 2,682,554,495 2,271,684,190 -------------- -------------- Liabilities: Payable for outstanding purchases 3,213,981 1,488,542 Accrued expenses and other payables 1,766,653 954,240 -------------- -------------- Total liabilities 4,980,634 2,442,782 -------------- -------------- Net assets available for plan benefits $2,677,573,861 $2,269,241,408 ============== ============== The accompanying notes are an integral part of the financial statements. 3 RAYTHEON SAVINGS AND INVESTMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS for the year ended December 31, 1997 Additions to net assets attributable to: Investment income (Notes B, E, and H): Net appreciation of investments $ 266,296,571 Interest 60,810,967 Dividends 65,037,158 -------------- 392,144,696 -------------- Contributions and deferrals: Employee deferrals 139,052,540 Employer contributions 41,031,026 Transfers (Note G) 2,012,446 -------------- 182,096,012 -------------- Total additions 574,240,708 -------------- Deductions from net assets attributable to: Distributions to participants 165,263,589 Administrative expenses 644,666 Total deductions 165,908,255 -------------- Increase in net assets 408,332,453 Net assets available for plan benefits, beginning of year 2,269,241,408 -------------- Net assets available for plan benefits, end of year $2,677,573,861 ============== The accompanying notes are an integral part of the financial statements. 4 A. Description of Plan: General The following description of the Raytheon Savings and Investment Plan (the "Plan") provides only general information. Participants should refer to the plan document for a complete description of the Plan's provisions. The Plan is a defined contribution plan covering certain employees of Raytheon Company (the "Company"). To participate in the Plan, eligible employees must have three months of service and may enter the Plan only on the first day of each month. The purpose of the Plan is to provide participants with a tax-effective means of meeting both short- and long-term investment objectives. The Plan is intended to be a "qualified cash or deferred arrangement" under Sections 401(a) and 401(k) of the Internal Revenue Code (the "Code"). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan's investments are held in the Raytheon Company Master Trust for Defined Contribution Plans ("Master Trust") with the assets of other defined contribution plans of the Company and subsidiaries. The trustee of the Master Trust maintains a separate account reflecting the equitable share in the Trust of each plan. Investment income and administrative expenses relating to the Master Trust are allocated to the individual plans based upon average monthly balances invested by each plan. Contributions and Deferrals Eligible employees are allowed to defer to the Plan up to 17% of their salaries. The Company contributes amounts equal to 50% of each participant's deferral, up to a maximum of 3% of the participant's salary. As of December 31, 1997, the annual employee deferral for a participant cannot exceed $9,500. Rollover contributions from other qualified plans are accepted by the Plan. Participants may invest their deferrals in increments of 1% in any combination of seven funds: (a) a Fixed Income Fund under which assets are invested primarily in contracts providing for fixed rates of interest for specified periods of time, (b) an Equity Fund which invests in shares of a mutual fund which consists primarily of income-producing equity securities, (c) a Raytheon Common Stock Fund which invests in shares of Raytheon Company Class B common stock, (d) a Stock Index Fund which invests in a commingled pool consisting primarily of equity securities and is designed to track the S&P 500 Index, (e) a Balanced Fund which invests in shares of a mutual fund which consists primarily of equity securities, bonds and money market instruments, (f) the Magellan Fund, a growth fund which invests primarily in equities of companies of all types and sizes, and (g) the Blue Chip Fund, a growth fund which invests primarily in equities of well known and established companies. Dividends and distributions from investments of the Raytheon Common Stock Fund, the Equity Fund, the Stock Index Fund, the Balanced Fund, the Magellan Fund and the Blue Chip Fund are reinvested in their respective funds; stock dividends, stock splits and similar changes are also reflected in the funds. 5 Participant Accounts Each participant's account is credited with the participant's deferral, the Company's contribution and an allocation of plan earnings. Plan earnings are allocated based on account balances by fund. Vesting Participants are immediately vested in their voluntary deferrals plus actual earnings thereon. Vesting requirements for employer contributions plus earnings thereon may vary depending upon when an employee became eligible to participate in the Plan. Vesting generally occurs upon the earliest of the completion of five years of service or three years of plan participation or upon retirement, death, disability, or attainment of normal retirement age. Forfeitures of the nonvested portions of terminated participants' accounts are used to reduce required contributions of the Company. Distributions to Participants A participant may withdraw all or a portion of deferrals, employer contributions and related earnings upon attainment of age 59 1/2. For reasons of financial hardship, as defined in the Plan document, a participant may withdraw all or a portion of deferrals. On termination of employment, a participant will receive a lump-sum distribution unless the vested account is valued in excess of $3,500 and the participant elects to defer distribution. A retiree or a beneficiary of a deceased participant may defer the distribution until January of the year following attainment of age 65. Loans to Participants A participant may borrow against a portion of the balance in the participant's account, subject to certain restrictions. The maximum amount of a loan is the lesser of one-half of the participant's vested account balance or $50,000. The minimum loan which may be granted is $500. The interest rate applied is equal to the prime rate published in the Wall Street Journal on the first business day in June and December of each year. Loans must be repaid over a period of up to 5 years by means of payroll deductions. In certain cases, the repayment period may be extended up to 15 years. Interest paid to the Plan on loans to participants is credited to the borrower's account in the investment fund to which repayments are made. Administrative Expenses Substantially all expenses of administering the Plan are paid by the plan participants. B. Summary of Significant Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting. 6 The Plan's investment contracts are fully benefit-responsive and are therefore included in the financial statements at their contract value, defined as net contributions and deferrals plus interest earned on the underlying investments at contracted rates. Because the investment contracts are fully benefit-responsive, contract values approximate fair value. Investments in mutual funds and the commingled pool are valued at the closing net asset value reported on the last business day of the year. Investments in securities (common stocks) traded on a national securities exchange are valued at the last reported sales price on the last business day of the year. Cash equivalents are short-term money market instruments and are valued at cost which approximates fair value. Security transactions are recorded on trade date. Except for its investment contracts (Note E), the Plan's investments are held by bank-administered trust funds. Payables for outstanding security transactions represent trades which have occurred but have not yet settled. The Plan presents in the statement of changes in net assets the net appreciation (depreciation) in the fair value of its investments which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. Dividend income is recorded on the ex-dividend date. Income from other investments is recorded as earned on an accrual basis. Benefits are recorded when paid. Certain items in the 1996 financial statements have been reclassified to conform to the 1997 presentation. The preparation of the financial statements in conformity with generally accepted accounting principles requires the plan administrator to make significant estimates and assumptions that affect the reported amounts of net assets and liabilities available for benefits at the date of the financial statements and the changes in net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from the estimates included in the financial statements. The Plan provides for various investment options in any combination of stocks, bonds, fixed income securities, mutual funds and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the statement of net assets available for plan benefits and the statement of changes in net assets available for plan benefits. C. Federal Income Tax Status: The Plan obtained its latest determination letter in July 1995, in which the Internal Revenue Service stated that the Plan, as submitted, was in compliance with the applicable requirements of the Internal Revenue Code. The Plan has been amended since receiving the determination letter. However, the Plan administrator and the Plan's legal counsel believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, no provision for income taxes has been included in the Plan's financial statements. 7 D. Plan Termination: Although it has not expressed any intention to do so, the Company reserves the right under the Plan at any time or times to discontinue its contributions and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, after payment of all expenses and proportional adjustment of accounts to reflect such expenses, fund losses or profits and reallocations, each participant shall be entitled to receive any amounts then credited to his or her account. E. Investment Contracts: The Plan invests in collateralized fixed income investment portfolios (with no expiration date), three of which are managed by insurance companies and one of which is managed by an investment management firm. The credited interest rates are adjusted semiannually to reflect the experienced and anticipated yields to be earned on such investments, based on their book value. The annualized average yield and credited interest rates were as follows: Annualized Average Credited Yield Interest Rate For year ended December 31, 1997: Bankers Trust (WBS 92-485) 6.95% 6.95% Metropolitan Life Insurance Company (GIC GA-12908) 6.86% 6.86% Metropolitan Life Insurance Company (GIC GA-13659) 6.43% 6.43% Prudential Asset Management Company (GIC 917163-001) 6.99% 6.99% For the year ended December 31, 1996: Bankers Trust (WBS 92-485) 6.87% 6.95% Metropolitan Life Insurance Company (GIC GA-12908) 6.77% 6.86% Metropolitan Life Insurance Company (GIC GA-13659) 6.36% 6.43% Prudential Asset Management Company (GIC 917163-001) 6.89% 6.99% The contract values are subject to limitations in certain situations including large workforce reductions and plan termination. In the financial statements, the two Metropolitan Life Insurance Company contracts are recorded as one investment option. F. Related Party Transactions: In accordance with the provisions of the Plan, Fidelity Management Trust Company (the "Trustee") acts as the Plan's agent for purchases and sales of shares of Raytheon Company Class B common stock. These transactions are performed on the Master Trust level. For the Master Trust, purchases amounted to $200,689,057 and $158,515,882 and sales amounted to $102,165,608 and $38,523,792 for the years ended December 31, 1997 and 1996, respectively. G. Transfers: Transfers include transfers of participant accounts, individually and/or in groups, between the Raytheon Savings and Investment Plan and all other plans included in the Raytheon Company Master Trust for those participants and/or groups of participants who changed plans during the year. Transfers also include transfers of participant accounts, individually and/or in groups, between the Raytheon Savings and Investment Plan and similar savings plans of other companies for those participants who changed companies during the year. 8 H. Fund Data: The following is a summary of net assets available for plan benefits by fund as of December 31, 1997:
Raytheon Fixed Common Stock Balanced Magellan Income Fund Equity Fund Stock Fund Index Fund Fund Fund Assets: Master trust investments: At contract value: Bankers Trust* $288,500,627 Prudential Insurance Company of America* 178,944,318 Metropolitan Life Insurance Company* 305,010,096 At fair value: Fidelity Equity Income Fund* $702,811,931 Raytheon Company Common Stock* $378,088,027 BT Pyramid Equity Index Fund* $410,284,635 Fidelity Balanced Fund $99,624,204 Fidelity Magellan Fund $73,972,306 Fidelity Blue Chip Fund Loans receivable from participants ------------ ------------ ------------ ------------ ----------- ----------- Total investments 772,455,041 702,811,931 378,088,027 410,284,635 99,624,204 73,972,306 ------------ ------------ ------------ ------------ ----------- ----------- Receivables: Accrued investment income and other receivables 2,782,739 982,670 Cash and cash equivalents 7,610,141 6,842,320 4,029,545 ------------ ------------ ------------ ------------ ----------- ----------- Total assets 780,065,182 702,811,931 387,713,086 415,296,850 99,624,204 73,972,306 ------------ ------------ ------------ ------------ ----------- ----------- Liabilities: Payable for outstanding purchases 3,213,981 Accrued expenses and other payables 750,673 1,015,980 ------------ ------------ ------------ ------------ ----------- ----------- Total liabilities 3,964,654 1,015,980 ------------ ------------ ------------ ------------ ----------- ----------- Net assets available for plan benefits $780,065,182 $702,811,931 $383,748,432 $414,280,870 $99,624,204 $73,972,306 ============ ============ ============ ============ =========== =========== *Represents more than 5% of net assets available for plan benefits 9 Blue Chip Fund Loan Fund Total Assets: Master trust investments: At contract value: Bankers Trust* $288,500,627 Prudential Insurance Company of America* 178,944,318 Metropolitan Life Insurance Company* 305,010,096 At fair value: Fidelity Equity Income Fund* 702,811,931 Raytheon Company Common Stock* 378,088,027 BT Pyramid Equity Index Fund* 410,284,635 Fidelity Balanced Fund 99,624,204 Fidelity Magellan Fund 73,972,306 Fidelity Blue Chip Fund $104,583,449 104,583,449 Loans receivable from participants $118,487,487 118,487,487 ------------ ------------ -------------- Total investments 104,583,449 118,487,487 2,660,307,080 ------------ ------------ -------------- Receivables: Accrued investment income and other receivables 3,765,409 Cash and cash equivalents 18,482,006 ------------ ------------ -------------- Total assets 104,583,449 118,487,487 2,682,554,495 ------------ ------------ -------------- Liabilities: Payable for outstanding purchases 3,213,981 Accrued expenses and other payables 1,766,653 ------------ ------------ -------------- Total liabilities 4,980,634 ------------ ------------ -------------- Net assets available for plan benefits $104,583,449 $118,487,487 $2,677,573,861 ============ ============ ============== *Represents more than 5% of net assets available for plan benefits
10 H. Fund Data, continued: The following is a summary of net assets available for plan benefits by fund as of December 31, 1996:
Raytheon Fixed Common Stock Balanced Magellan Income Fund Equity Fund Stock Fund Index Fund Fund Fund Assets: Master trust investments: At contract value: Bankers Trust* $291,452,605 Prudential Insurance Company of America* 180,698,171 Metropolitan Life Insurance Company* 300,578,896 At fair value: Fidelity Equity Income Fund* $528,486,753 Raytheon Company Common Stock* $372,372,739 BT Pyramid Equity Index Fund* $279,051,705 Fidelity Balanced Fund $76,235,541 Fidelity Magellan Fund $44,824,995 Fidelity Blue Chip Fund Loans receivable from participants* ------------ ------------ ------------ ------------ ----------- ----------- Total investments 772,729,672 528,486,753 372,372,739 279,051,705 76,235,541 44,824,995 ------------ ------------ ------------ ------------ ----------- ----------- Receivables: Accrued investment income and other receivables 548,433 382,606 Cash and cash equivalents 12,555,817 5,629,300 3,213,218 ------------ ------------ ------------ ------------ ----------- ----------- Total assets 785,285,489 528,486,753 378,550,472 282,647,529 76,235,541 44,824,995 ------------ ------------ ------------ ------------ ----------- ----------- Liabilities: Payable for outstanding purchases 1,488,542 Accrued expenses and other payables 520,203 434,037 ------------ ------------ ------------ ------------ ----------- ----------- Total liabilities 2,008,745 434,037 ------------ ------------ ------------ ------------ ----------- ----------- Net assets available for plan benefits $785,285,489 $528,486,753 $376,541,727 $282,213,492 $76,235,541 $44,824,995 ============ ============ ============ ============ =========== =========== *Represents more than 5% of net assets available for plan benefits 11 Blue Chip Fund Loan Fund Total Assets: Master trust investments: At contract value: Bankers Trust* $291,452,605 Prudential Insurance Company of America* 180,698,171 Metropolitan Life Insurance Company* 300,578,896 At fair value: Fidelity Equity Income Fund* 528,486,753 Raytheon Company Common Stock* 372,372,739 BT Pyramid Equity Index Fund* 279,051,705 Fidelity Balanced Fund 76,235,541 Fidelity Magellan Fund 44,824,995 Fidelity Blue Chip Fund $61,559,093 61,559,093 Loans receivable from participants* $114,094,318 114,094,318 ----------- ------------ -------------- Total investments 61,559,093 114,094,318 2,249,354,816 ----------- ------------ -------------- Receivables: Accrued investment income and other receivables 931,039 Cash and cash equivalents 21,398,335 ----------- ------------ -------------- Total assets 61,559,093 114,094,318 2,271,684,190 ----------- ------------ -------------- Liabilities: Payable for outstanding purchases 1,488,542 Accrued expenses and other payables 954,240 ----------- ------------ -------------- Total liabilities 2,442,782 ----------- ------------ -------------- Net assets available for plan benefits $61,559,093 $114,094,318 $2,269,241,408 =========== ============ ============== *Represents more than 5% of net assets available for plan benefits
12 H. Fund Data, continued: The following is a summary of net assets available for plan benefits by fund as of December 31, 1997:
Raytheon Fixed Common Stock Balanced Magellan Income Fund Equity Fund Stock Fund Index Fund Fund Fund Additions to net assets attributable to: Investment income: Net appreciation of investments $120,948,030 $20,461,839 $ 96,741,885 $ 6,060,528 $ 8,101,648 Interest $ 52,083,232 339,719 263,648 Dividends 38,332,138 5,635,976 11,796,445 4,345,938 ------------ ------------ ----------- ------------ ----------- ----------- 52,083,232 159,280,168 26,437,534 97,005,533 17,856,973 12,447,586 ------------ ------------ ----------- ------------ ----------- ----------- Contributions and deferrals: Employee deferrals 37,374,193 31,354,470 23,142,038 23,100,455 6,820,556 7,325,877 Employer contributions 11,021,000 9,475,138 6,973,904 6,738,271 2,031,306 2,141,751 Transfers 416,725 217,088 486,144 313,180 33,797 43,026 ------------ ------------ ----------- ------------ ----------- ----------- 48,811,918 41,046,696 30,602,086 30,151,906 8,885,659 9,510,654 ------------ ------------ ----------- ------------ ----------- ----------- Total additions 100,895,150 200,326,864 57,039,620 127,157,439 26,742,632 21,958,240 ------------ ------------ ----------- ------------ ----------- ----------- Deductions from net assets attributable to: Distributions to participants 78,215,945 33,061,517 19,458,406 18,864,751 5,234,076 2,700,029 Administrative expenses 218,539 168,459 106,090 95,457 23,552 13,897 ------------ ------------ ----------- ------------ ----------- ----------- Total deductions 78,434,484 33,229,976 19,564,496 18,960,208 5,257,628 2,713,926 ------------ ------------ ----------- ------------ ----------- ----------- Interfund transfers (27,680,973) 7,228,290 (30,268,419) 23,870,147 1,903,659 9,902,997 ------------ ------------ ----------- ------------ ----------- ----------- Increase (decrease) in net assets (5,220,307) 174,325,178 7,206,705 132,067,378 23,388,663 29,147,311 Net assets available for plan benefits, beginning of year 785,285,489 528,486,753 376,541,727 282,213,492 76,235,541 44,824,995 ------------ ------------ ------------ ------------ ----------- ----------- Net assets available for plan benefits, end of year $780,065,182 $702,811,931 $383,748,432 $414,280,870 $99,624,204 $73,972,306 ============ ============ ============ ============ =========== =========== 13 Blue Chip Fund Loan Fund Total Additions to net assets attributable to: Investment income: Net appreciation of investments $ 13,982,641 $266,296,571 Interest $ 8,124,368 60,810,967 Dividends 4,926,661 65,037,158 ----------- ------------ ------------ 18,909,302 8,124,368 392,144,696 ----------- ------------ ------------ Contributions and deferrals: Employee deferrals 9,651,786 283,165 139,052,540 Employer contributions 2,649,656 41,031,026 Transfers 49,778 452,708 2,012,446 ----------- ------------ ------------ 12,351,220 735,873 182,096,012 ----------- ------------ ------------ Total additions 31,260,522 8,860,241 574,240,708 ----------- ------------ ------------ Deductions from net assets attributable to: Distributions to participants 3,102,399 4,626,466 165,263,589 Administrative expenses 18,672 644,666 ----------- ------------ ------------ Total deductions 3,121,071 4,626,466 165,908,255 ----------- ------------ ------------ Interfund transfers 14,884,905 159,394 -- ----------- ------------ ------------ Increase (decrease) in net assets 43,024,356 4,393,169 408,332,453 Net assets available for plan benefits, beginning of year 61,559,093 114,094,318 2,269,241,408 ------------ ------------ -------------- Net assets available for plan benefits, end of year $104,583,449 $118,487,487 $2,677,573,861 ============ ============ ==============
14 I. Master Trust: All plan investments are included under the Master Trust. At December 31, 1997, assets of the Plan represented 76.2% of the total assets under the Master Trust. This has decreased from 80.2% at December 31, 1996. The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1997:
Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Blue Chip Fund Fund Stock Fund Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $351,035,073 Prudential Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* $782,799,011 Raytheon Company Common Stock* $745,980,294 BT Pyramid Equity Index Fund* $484,781,406 Fidelity Balance Fund $117,556,481 Fidelity Magellan Fund $91,863,155 Fidelity Blue Chip Fund $136,586,123 Templeton Foreign I Fund Fidelity Investment Grade Bond Fund Fidelity Retirement Money Market Fund Loans receivable from participants ------------ ------------ ------------ ------------ ------------ ----------- ------------ Total investments 939,889,852 782,799,011 745,980,294 484,781,406 117,556,481 91,863,155 136,586,123 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Receivables: Employer contribution Accrued Investment income and other receivables 5,489,592 1,161,112 Cash and cash equivalents 9,232,100 13,498,051 4,761,268 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Total assets 949,121,952 782,799,011 764,967,937 490,703,786 117,556,481 91,863,155 136,586,123 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Liabilities: Payables for outstanding purchases 6,340,318 Accrued expenses and other payables 1,480,875 1,200,471 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Total liabilities 7,821,193 1,200,471 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Net assets available for plan benefits $949,121,952 $782,799,011 $757,146,744 $489,503,315 $117,556,481 $91,863,155 $136,586,123 ============ ============ ============ ============ ============ =========== ============ Percentage of Master Trust that 82.2% 89.8% 50.7% 84.6% 84.7% 80.5% 76.6% are plan assets of the Raytheon Savings and Investment Plan. *Represents more than 5% of net assets available for plan benefits. N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund, and Retirement Money Market Fund are not available for the Raytheon Savings and Investment Plan. 15 Templeton Investment Retirement Foreign I Grade Money Loan Fund Bond Fund Market Fund Fund Total Assets: Investments: At contract value: Bankers Trust* $ 351,035,073 Prudential Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* 782,799,011 Raytheon Company Common Stock* 745,980,294 BT Pyramid Equity Index Fund* 484,781,406 Fidelity Balance Fund 117,556,481 Fidelity Magellan Fund 91,863,155 Fidelity Blue Chip Fund 136,586,123 Templeton Foreign I Fund $5,471,176 5,471,176 Fidelity Investment grade Bond Fund $1,548,125 1,548,125 Fidelity Retirement Money Market Fund $12,186,085 12,186,085 Loans receivable from participants $166,395,767 166,395,767 ---------- ---------- ----------- ------------ -------------- Total investments 5,471,176 1,548,125 12,186,085 166,395,767 3,485,057,475 ---------- ---------- ----------- ------------ -------------- Receivables: Employer contribution 4,015,100 4,015,100 Accrued investment income and other receivables 6,650,704 Cash and cash equivalents 27,491,419 ---------- ---------- ----------- ------------ -------------- Total assets 5,471,176 1,548,125 16,201,185 166,395,767 3,523,214,698 ---------- ---------- ----------- ------------ -------------- Liabilities: Payables for outstanding purchases 6,340,318 Accrued expenses and other payables 2,681,346 ---------- ---------- ----------- ------------ -------------- Total liabilities 9,021,664 ---------- ---------- ----------- ------------ -------------- Net assets available for plan benefits $5,471,176 $1,548,125 $16,201,185 $166,395,767 $3,514,193,034 ========== ========== =========== ============ ============== Percentage of Master Trust that are N/A N/A N/A 71.2% 76.2% plan assets of the Raytheon Savings and Investment Plan *Represents more than 5% of net assets available for plan benefits N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund, and Retirement Money Market Fund are not available for the Raytheon Savings and Investment Plan.
16 I. Master Trust, continued: The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1996:
Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $339,670,440 Prudential Insurance Company of America* 210,594,065 Metropolitan Life Insurance Company* 350,310,646 At fair value: Fidelity Equity Income Fund * $578,166,630 Raytheon Company Common Stock* $671,136,043 BT Pyramid Equity Index Fund* $307,555,916 Fidelity Balance Fund $83,265,065 Fidelity Magellan Fund $50,454,961 Fidelity Blue Chip Fund Loans receivable from participants* ------------ ------------ ------------ ------------ ----------- ----------- Total investments 900,575,151 578,166,630 671,136,043 307,555,916 83,265,065 50,454,961 ------------ ------------ ------------ ------------ ----------- ----------- Receivables: Accrued investment income 39,737 13,686 Cash and cash equivalents 14,633,134 10,145,818 3,541,437 ------------ ------------ ------------ ------------ ----------- ----------- Total assets 915,208,285 578,166,630 681,321,598 311,111,039 83,265,065 50,454,961 ------------ ------------ ------------ ------------ ----------- ----------- Liabilities: Payables for outstanding purchases 2,682,835 ------------ ------------ ------------ ------------ ----------- ----------- Total liabilities 2,682,835 ------------ ------------ ------------ ------------ ----------- ----------- Net assets available for plan benefits $915,208,285 $578,166,630 $678,638,763 $311,111,039 $83,265,065 $50,454,961 ============ ============ ============ ============ =========== =========== Percentage of Master Trust that are 85.8% 91.4% 55.5% 90.7% 91.6% 88.8% plan assets of the Raytheon Savings and Investment Plan. *Represents more than 5% of net assets available for plan benefits. 17 Blue Chip Loan Fund Fund Total Assets: Investments: At contract value: Bankers Trust* $339,670,440 Prudential Insurance Company of America* 210,594,065 Metropolitan Life Insurance Company* 350,310,646 At fair value: Fidelity Equity Income Fund * 578,166,630 Raytheon Company Common Stock* 671,136,043 BT Pyramid Equity Index Fund* 307,555,916 Fidelity Balance Fund 83,265,065 Fidelity Magellan Fund 50,454,961 Fidelity Blue Chip Fund $67,866,240 67,866,240 Loans receivable from participants* $144,824,714 144,824,714 ----------- ------------ -------------- Total investments 67,866,240 144,824,714 2,803,844,720 ----------- ------------ -------------- Receivables: Accrued investment income 53,423 Cash and cash equivalents 28,320,389 ----------- ------------ -------------- Total assets 67,866,240 144,824,714 2,832,218,532 ----------- ------------ -------------- Liabilities: Payables for outstanding purchases 2,682,835 ----------- ------------ -------------- Total liabilities 2,682,835 ----------- ------------ -------------- Net assets available for plan benefits $67,866,240 $144,824,714 $2,829,535,697 =========== ============ ============== Percentage of Master Trust that are 90.7% 78.8% 80.2% plan assets of the Raytheon Savings and Investment Plan *Represents more than 5% of net assets available for plan benefits
18 I. Master Trust, continued: The following is a summary of investment income by fund under the Master Trust for the year ended December 31, 1997:
Fixed Raytheon Income Common Stock Balanced Magellan Blue Chip Fund Equity Fund Stock Fund Index Fund Fund Fund Fund Investment income: Net appreciation (depreciation) of assets $ (191,924) $132,974,182 $30,715,963 $109,162,707 $ 6,388,316 $ 9,026,047 $15,474,118 Interest 62,319,073 673,934 312,511 Dividends 42,443,971 11,118,152 13,680,351 5,217,835 6,302,875 ----------- ------------ ----------- ------------ ----------- ----------- ----------- Total investment income/(loss) $62,127,149 $175,418,153 $42,508,049 $109,475,218 $20,068,667 $14,243,882 $21,776,993 =========== ============ =========== ============ =========== =========== =========== 19 Templeton Investment Retirement Foreign I Grade Money Loan Fund Bond Fund Market Fund Fund Total Investment income: Net appreciation (depreciation) of assets $(826,396) $22,581 $302,745,594 Interest $10,848,204 74,153,722 Dividends 549,717 36,337 $266,835 79,616,073 --------- ------- ------- ----------- ------------ Total investment income/(loss) $(276,679) $58,918 $266,835 $10,848,204 $456,515,389 ========= ======= ======== =========== ============
EX-99 4 1 EXHIBIT 99.1a CONSENT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Raytheon Company We consent to the incorporation by reference in the Registration Statement of Raytheon Company on Form S-8 (File No. 333-56117) of our report dated May 29, 1998 on our audits of the financial statements of the Raytheon Savings and Investment Plan as of December 31, 1997 and 1996 and for the year ended December 31, 1997, which report is included in this annual report on Form 10-K/A. Coopers & Lybrand LLP Boston, Massachusetts June 29, 1998 EX-99 5 1 EXHIBIT 99.2 RAYTHEON SAVINGS AND INVESTMENT PLAN FOR SPECIFIED HOURLY PAYROLL EMPLOYEES FINANCIAL STATEMENTS TO ACCOMPANY 1997 FORM 5500 ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN UNDER ERISA OF 1974 FOR THE YEAR ENDED DECEMBER 31, 1997 The supplemental schedules required to accompany the Plan's Form 5500 are not required since the Plan's assets are held in a Master Trust. Accordingly, detailed financial information, including the supplemental schedules, must be filed separately with the Department of Labor by the plan administrator. REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Raytheon Company: We have audited the accompanying statements of net assets available for plan benefits of the Raytheon Savings and Investment Plan for Specified Hourly Payroll Employees (the "Plan") as of December 31, 1997 and 1996, and the related statement of changes in net assets available for plan benefits for the year ended December 31, 1997. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Plan as of December 31, 1997 and 1996, and the changes in net assets available for plan benefits for the year ended December 31, 1997 in conformity with generally accepted accounting principles. Coopers & Lybrand LLP Boston, Massachusetts May 29, 1998 2 RAYTHEON SAVINGS AND INVESTMENT PLAN FOR SPECIFIED HOURLY PAYROLL EMPLOYEES STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS as of December 31, 1997 and 1996 1997 1996 Assets: Master trust investments: At contract value (Notes B, E and H) $118,688,832 $114,483,156 At fair value (Notes B, F and H) 210,894,210 167,294,559 ------------ ------------ 329,583,042 281,777,715 ------------ ------------ Receivables: Accrued investment income and other receivables 536,061 120,280 Cash and cash equivalents 2,639,423 3,030,913 ------------ ------------ Total assets 332,758,526 284,928,908 ------------ ------------ Liabilities: Payable for outstanding purchases 512,188 233,567 Accrued expenses and other payables 215,365 120,450 ------------ ------------ Total liabilities 727,553 354,017 ------------ ------------ Net assets available for plan benefits $332,030,973 $284,574,891 ============ ============ The accompanying notes are an integral part of the financial statements. 3 RAYTHEON SAVINGS AND INVESTMENT PLAN FOR SPECIFIED HOURLY PAYROLL EMPLOYEES STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS for the year ended December 31, 1997 Additions to net assets attributable to: Investment income (Notes B, E and H): Net appreciation of investments $24,128,490 Interest 9,928,559 Dividends 5,734,138 ------------ 39,791,187 ------------ Contributions and deferrals: Employee deferrals 22,972,877 Employer contributions 7,537,344 Transfers (Note G) 316,293 ------------ 30,826,514 ------------ Total additions 70,617,701 ------------ Deductions from net assets attributable to: Distributions to participants 22,400,103 Administrative expenses 77,846 Transfers (Note G) 683,670 ------------ Total deductions 23,161,619 ------------ Increase in net assets 47,456,082 Net assets available for plan benefits, beginning of year 284,574,891 ------------ Net assets available for plan benefits, end of year $332,030,973 ============ The accompanying notes are an integral part of the financial statements. 4 A. Description of Plan: General The following description of the Raytheon Savings and Investment Plan for Specified Hourly Payroll Employees (the "Plan") provides only general information. Participants should refer to the plan document for a complete description of the Plan's provisions. The Plan is a defined contribution plan covering certain hourly payroll employees of Raytheon Company (the "Company") who are employed in units represented by specified labor unions. To participate in the Plan, eligible employees must have three months of service and may enter the Plan only on the first day of each month. The purpose of the Plan is to provide participants with a tax-effective means of meeting both short- and long-term investment objectives. The Plan is intended to be a "qualified cash or deferred arrangement" under Sections 401(a) and 401(k) of the Internal Revenue Code (the "Code"). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan's investments are held in the Raytheon Company Master Trust for Defined Contribution Plans "Master Trust" with the assets of other defined contribution plans of Raytheon Company and subsidiaries. The trustee of the Master Trust maintains a separate account reflecting the equitable share in the Trust of each plan. Investment income and administrative expenses relating to the Master Trust are allocated to the individual plans based upon average monthly balances invested by each plan. Contributions and Deferrals Eligible employees are allowed to defer to the Plan up to 17% of their salaries. The Company contributes amounts equal to 50% of each participant's deferral, up to a maximum of 3% of the participant's salary. As of December 31, 1997, the annual employee deferral for a participant cannot exceed $9,500. Rollover contributions from other qualified plans are accepted by the Plan. Participants may invest their deferrals in increments of 1% in any combination of seven funds: (a) a Fixed Income Fund under which assets are invested primarily in contracts providing for fixed rates of interest for specified periods of time, (b) an Equity Fund which invests in shares of a mutual fund which consists primarily of income-producing equity securities, (c) a Raytheon Common Stock Fund which invests in shares of Raytheon Company Class B common stock, (d) a Stock Index Fund which invests in a commingled pool consisting primarily of equity securities and is designed to track the S&P 500 Index, (e) a Balanced Fund which invests in shares of a mutual fund which consists primarily of equity securities, bonds and money market instruments, (f) the Magellan Fund, a growth fund which invests primarily in equities of companies of all types and sizes, and (g) the Blue Chip Fund, a growth fund which invests primarily in equities of well known and established companies. Dividends and distributions from investments of the Equity Fund, the Raytheon Common Stock Fund, the Stock Index Fund, the Balanced Fund, the Magellan Fund and the Blue Chip Fund are reinvested in their respective funds; stock dividends, stock splits and similar changes are also reflected in the funds. 5 Participant Accounts Each participant's account is credited with the participant's deferral, the Company's contribution and an allocation of plan earnings. Plan earnings are allocated based on account balances by fund. Vesting Participants are immediately vested in their voluntary deferrals plus actual earnings thereon. Vesting requirements for employer contributions plus earnings thereon may vary depending upon when an employee became eligible to participate in the Plan. Vesting generally occurs upon the earliest of the completion of five years of service or upon three years of participation or upon retirement, death, disability, or attainment of normal retirement age. Forfeitures of the nonvested portions of terminated participants' accounts are used to reduce required contributions of the Company. Distributions to Participants A participant may withdraw all or a portion of deferrals, employer contributions and related earnings upon attainment of age 59-1/2. For reasons of financial hardship, as defined in the Plan document, a participant may withdraw all or a portion of deferrals. On termination of employment, a participant will receive a lump-sum distribution unless the vested account is valued in excess of $3,500 and the participant elects to defer distribution. A retiree or a beneficiary of a deceased participant may defer the distribution until January of the year following attainment of age 65. Loans to Participants A participant may borrow against a portion of the balance in the participant's account, subject to certain restrictions. The maximum amount of a loan is the lesser of one-half of the participant's vested account balance or $50,000. The minimum loan which may be granted is $500. The interest rate applied is equal to the prime rate published in the Wall Street Journal on the first business day in June and December of each year. Loans must be repaid over a period of up to 5 years by means payroll deductions. In certain cases, the repayment period may be extended up to 15 years. Interest paid to the Plan on loans to participants is credited to the borrower's account in the investment fund to which repayments are made. Administrative Expenses Substantially all expenses of administering the Plan are paid by the plan participants. B. Summary of Significant Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting. 6 The Plan's investment contracts are fully benefit-responsive and are therefore included in the financial statements at their contract value, defined as net contributions and deferrals plus interest earned on the underlying investments at contracted rates. Because the investment contracts are fully benefit-responsive, contract values approximate fair value. Investments in mutual funds and the commingled pool are valued at the closing net asset value reported on the last business day of the year. Investments in securities (common stocks) traded on a national securities exchange are valued at the last reported sales price on the last business day of the year. Cash equivalents are short-term money market instruments and are valued at cost which approximates fair value. Security transactions are recorded on trade date. Except for its investment contracts (Note E), the Plan's investments are held by bank-administered trust funds. Payables for outstanding security transactions represent trades which have occurred but have not yet settled. The Plan presents in the statement of changes in net assets the net appreciation (depreciation) in the fair value of its investments which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. Dividend income is recorded on the ex-dividend date. Income from other investments is recorded as earned on an accrual basis. Benefits are recorded when paid. Certain items in the 1996 financial statements have been reclassified to conform to the 1997 presentation. The preparation of the financial statements in conformity with generally accepted accounting principles requires the Plan administrator to make significant estimates and assumptions that affect the reported amounts of net assets and liabilities available for benefits at the date of the financial statements and the changes in net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from the estimates included in the financial statements. The Plan provides for various investment options in any combination of stocks, bonds, fixed income securities, mutual funds and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the statement of net assets available for plan benefits and the statement of changes in net assets available for plan benefits. 7 C. Federal Income Tax Status: The Plan obtained its latest determination letter in June 1995, in which the Internal Revenue Service stated that the Plan, as submitted, was in compliance with the applicable requirements of the Internal Revenue Code. The Plan has been amended since receiving the determination letter. However, the Plan administrator and the Plan's legal counsel believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, no provision for income taxes has been included in the Plan's financial statements. D. Plan Termination: Although it has not expressed any intention to do so, the Company reserves the right under the Plan at any time or times to discontinue its contributions and to terminate the Plan subject to the provisions of ERISA. In the event of plan termination, after payment of all expenses and proportional adjustment of accounts to reflect such expenses, fund losses or profits, and reallocations, each participant shall be entitled to receive any amounts then credited to his or her account. E. Investment Contracts: The Plan invests in collateralized fixed income investment portfolios (with no expiration date), three of which are managed by insurance companies and one of which is managed by an investment management firm. The credited interest rates are adjusted semiannually to reflect the experienced and anticipated yields to be earned on such investments, based on their book value. The annualized average yield and credited interest rates were as follows: Annualized Average Credited Yield Interest Rate For the year ended December 31, 1997: Bankers Trust (WBS 92-485) 6.95% 6.95% Metropolitan Life Insurance Company (GIC GA-12908) 6.86% 6.86% Metropolitan Life Insurance Company (GIC GA-13659) 6.43% 6.43% Prudential Asset Management Company (GIC 917163-001) 6.99% 6.99% For the year ended December 31, 1996: Bankers Trust (WBS 92-485) 6.87% 6.95% Metropolitan Life Insurance Company (GIC GA-12908) 6.77% 6.86% Metropolitan Life Insurance Company (GIC GA-13659) 6.36% 6.43% Prudential Asset Management Company (GIC 917163-001) 6.89% 6.99% The contract values are subject to limitations in certain situations including large workforce reductions and plan termination. In the financial statements, the two Metropolitan Life Insurance Company contracts are recorded as one investment option. 8 F. Related Party Transactions: In accordance with the provisions of the Plan, Fidelity Management Trust Company (the "Trustee") acts as the Plan's agent for purchases and sales of shares of Raytheon Company Class B common stock. These transactions are performed on the Master Trust level. For the Master Trust, purchases amounted to $200,689,057 and $158,515,882 and sales amounted to $102,165,608 and $38,523,792 for the years ended December 31, 1997 and 1996 respectively. G. Transfers: Transfers include transfers of participant accounts, individually and/or in groups, between the Raytheon Savings and Investment Plan for Specified Hourly Payroll Employees and other plans included in the Raytheon Company Master Trust for those participants and/or groups of participants who changed plans during the year. Transfers also include transfers of participant accounts, individually and/or in groups, between the Raytheon Savings and Investment Plan for Specified Hourly Payroll Employees and similar savings plans of other companies for those participants who changed companies during the year. 9 H. Fund Data: The following is a summary of net assets available for plan benefits by fund as of December 31, 1997:
Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Assets: Master trust investments: At contract value: Bankers Trust* $ 44,328,538 Prudential Insurance Company of America* 27,495,053 Metropolitan Life Insurance Company* 46,865,241 At fair value: Fidelity Equity Income Fund* $60,433,311 Raytheon Company Common Stock* $60,253,020 BT Pyramid Equity Index Fund* $38,661,267 Fidelity Balanced Fund $6,955,322 Fidelity Magellan Fund $6,462,497 Fidelity Blue Chip Fund Loans receivable from participants* ------------ ----------- ----------- ----------- ---------- ---------- Total investments 118,688,832 60,433,311 60,253,020 38,661,267 6,955,322 6,462,497 ------------ ----------- ----------- ----------- ---------- ---------- Receivables: Accrued investment income and other receivables 443,463 92,598 Cash and cash equivalents 1,169,309 1,090,409 379,705 ------------ ----------- ----------- ----------- ---------- ---------- Total assets 119,858,141 60,433,311 61,786,892 39,133,570 6,955,322 6,462,497 ------------ ----------- ----------- ----------- ---------- ---------- Liabilities: Payable for security purchases 512,188 Accrued expenses and other payables 119,629 95,736 ------------ ----------- ----------- ----------- ---------- ---------- Total liabilities 631,817 95,736 ------------ ----------- ----------- ----------- ---------- ---------- Net assets available for plan benefits $119,858,141 $60,433,311 $61,155,075 $39,037,834 $6,955,322 $6,462,497 ============ =========== =========== =========== ========== ========== *Represents more than 5% of net assets available for plan benefits 10 Blue Chip Loan Fund Fund Total Assets: Master trust investments: At contract value: Bankers Trust* $ 44,328,538 Prudential Insurance Company of America* 27,495,053 Metropolitan Life Insurance Company* 46,865,241 At fair value: Fidelity Equity Income Fund* 60,433,311 Raytheon Company Common Stock* 60,253,020 BT Pyramid Equity Index Fund* 38,661,267 Fidelity Balanced Fund 6,955,322 Fidelity Magellan Fund 6,462,497 Fidelity Blue Chip Fund $7,967,742 7,967,742 Loans receivable from participants* $30,161,051 30,161,051 ---------- ----------- ------------ Total investments 7,967,742 30,161,051 329,583,042 ---------- ----------- ------------ Receivables: Accrued investment income and other receivables 536,061 Cash and cash equivalents 2,639,423 ---------- ----------- ------------ Total assets 7,967,742 30,161,051 332,758,526 ---------- ----------- ------------ Liabilities: Payable for security purchases 512,188 Accrued expenses and other payables 215,365 ---------- ----------- ------------ Total liabilities 727,553 ---------- ----------- ------------ Net assets available for plan benefits $7,967,742 $30,161,051 $332,030,973 ========== =========== ============ *Represents more than 5% of net assets available for plan benefits
11 H. Fund Data, continued: The following is a summary of net assets available for plan benefits by fund as of December 31, 1996:
Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Assets: Master trust investments: At contract value: Bankers Trust* $ 43,177,931 Prudential Insurance Company of America* 26,771,195 Metropolitan Life Insurance Company* 44,534,030 At fair value: Fidelity Equity Income Fund* $ 43,658,303 Raytheon Company Common Stock* $58,428,943 BT Pyramid Equity Index Fund* $24,961,318 Fidelity Balanced Fund $4,954,118 Fidelity Magellan Fund $3,449,226 Fidelity Blue Chip Fund Loans receivable from participants* ------------ ----------- ----------- ----------- ---------- ---------- Total investments 114,483,156 43,658,303 58,428,943 24,961,318 4,954,118 3,449,226 ------------ ----------- ----------- ----------- ---------- ---------- Receivables: Accrued investment income and other receivables 86,055 34,225 Cash and cash equivalents 1,860,197 883,292 287,424 ------------ ----------- ----------- ----------- ---------- ---------- Total assets 116,343,353 43,658,303 59,398,290 25,282,967 4,954,118 3,449,226 ------------ ----------- ----------- ----------- ---------- ---------- Liabilities: Payable for security purchases 233,567 Accrued expenses and other payables 81,625 38,825 ------------ ----------- ----------- ----------- ---------- ---------- Total liabilities 315,192 38,825 ------------ ----------- ----------- ----------- ---------- ---------- Net assets available for plan benefits $116,343,353 $43,658,303 $59,083,098 $25,244,142 $4,954,118 $3,449,226 ============ =========== =========== =========== ========== ========== *Represents more than 5% of net assets available for plan benefits 12 Blue Chip Loan Fund Fund Total Assets: Master trust investments: At contract value: Bankers Trust* $ 43,177,931 Prudential Insurance Company of America* 26,771,195 Metropolitan Life Insurance Company* 44,534,030 At fair value: Fidelity Equity Income Fund* 43,658,303 Raytheon Company Common Stock* 58,428,943 BT Pyramid Equity Index Fund* 24,961,318 Fidelity Balanced Fund 4,954,118 Fidelity Magellan Fund 3,449,226 Fidelity Blue Chip Fund $3,856,512 3,856,512 Loans receivable from participants* $27,986,139 27,986,139 ---------- ----------- ------------ Total investments 3,856,512 27,986,139 281,777,715 ---------- ----------- ------------ Receivables: Accrued investment income and other receivables 120,280 Cash and cash equivalents 3,030,913 ---------- ----------- ------------ Total assets 3,856,512 27,986,139 284,928,908 ---------- ----------- ------------ Liabilities: Payable for security purchases 233,567 Accrued expenses and other payables 120,450 ---------- ----------- ------------ Total liabilities 354,017 ---------- ----------- ------------ Net assets available for plan benefits $3,856,512 $27,986,139 $284,574,891 ========== =========== ============ *Represents more than 5% of net assets available for plan benefits
13 H. Fund Data, continued: The following is a summary of changes in net assets available for plan benefits by fund for the year ended December 31, 1997:
Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Additions to net assets attributable to: Investment income: Net appreciation of investments $10,239,734 $ 2,967,135 $ 9,026,757 $ 403,216 $ 594,940 Interest $ 7,851,164 54,192 24,903 Dividends 3,278,728 898,130 810,267 369,647 ------------ ----------- ----------- ----------- ---------- ---------- 7,851,164 13,518,462 3,919,457 9,051,660 1,213,483 964,587 ------------ ----------- ----------- ----------- ---------- ---------- Contributions and deferrals: Employee deferrals 9,368,379 3,598,647 5,088,392 2,747,610 605,549 700,927 Employer contributions 3,326,160 1,109,758 1,624,848 830,490 185,207 209,348 Transfers 46,161 82,365 ------------ ----------- ----------- ----------- ---------- ---------- 12,694,539 4,708,405 6,713,240 3,578,100 836,917 992,640 ------------ ----------- ----------- ----------- ---------- ---------- Total additions 20,545,703 18,226,867 10,632,697 12,629,760 2,050,400 1,957,227 ------------ ----------- ----------- ----------- ---------- ---------- Deductions from net assets attributable to: Distributions to participants 11,616,989 2,869,930 3,322,970 2,081,750 363,234 193,308 Administrative expenses 32,938 14,292 15,351 11,261 1,586 1,108 Transfers 400,342 95,582 31,320 156,426 ------------ ----------- ----------- ----------- ---------- ---------- Total deductions 12,050,269 2,979,804 3,369,641 2,249,437 364,820 194,416 ------------ ----------- ----------- ----------- ---------- ---------- Interfund transfers (4,980,646) 1,527,945 (5,191,079) 3,413,369 315,624 1,250,460 ------------ ----------- ----------- ----------- ---------- ---------- Increase in net assets 3,514,788 16,775,008 2,071,977 13,793,692 2,001,204 3,013,271 Net assets available for plan benefits, beginning of year 116,343,353 43,658,303 59,083,098 25,244,142 4,954,118 3,449,226 ------------ ----------- ----------- ----------- ---------- ---------- Net assets available for plan benefits, end of year $119,858,141 $60,433,311 $61,155,075 $39,037,834 $6,955,322 $6,462,497 ============ =========== =========== =========== ========== ========== 14 Blue Chip Loan Fund Fund Total attributable to: Investment income: Net appreciation of investments $ 896,708 $ 24,128,490 Interest $1,998,300 9,928,559 Dividends 377,366 5,734,138 ---------- ----------- ------------ 1,274,074 1,998,300 39,791,187 ---------- ----------- ------------ Contributions and deferrals: Employee deferrals 863,373 22,972,877 Employer contributions 251,533 7,537,344 Transfers 42,247 145,520 316,293 ---------- ----------- ------------ 1,157,153 145,520 30,826,514 ---------- ----------- ------------ Total additions 2,431,227 2,143,820 70,617,701 ---------- ----------- ------------ Deductions from net assets attributable to: Distributions to participants 236,246 1,715,676 22,400,103 Administrative expenses 1,310 77,846 Transfers 683,670 ---------- ----------- ------------ Total deductions 237,556 1,715,676 23,161,619 ---------- ----------- ------------ Interfund transfers 1,917,559 1,746,768 -- ---------- ----------- ------------ Increase in net assets 4,111,230 2,174,912 47,456,082 Net assets available for plan benefits, beginning of year 3,856,512 27,986,139 284,574,891 ---------- ----------- ------------ Net assets available for plan benefits, end of year $7,967,742 $30,161,051 $332,030,973 ========== =========== ============
15 I. Master Trust: All plan investments are included under the Master Trust. At December 31, 1997, assets of the Plan represented 9.4% of the total assets under the Master Trust. This has decreased from 10.1% at December 31, 1996. The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1997:
Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Blue Chip Fund Fund Stock Fund Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $351,035,073 Prudential Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* $782,799,011 Raytheon Company Common Stock* $745,980,294 BT Pyramid Equity Index Fund* $484,781,406 Fidelity Balance Fund $117,556,481 Fidelity Magellan Fund $91,863,155 Fidelity Blue Chip Fund $136,586,123 Templeton Foreign I Fund Fidelity Investment Grade Bond Fund Fidelity Retirement Money Market Fund Loans receivable from participants ------------ ------------ ------------ ------------ ------------ ----------- ------------ Total investments 939,889,852 782,799,011 745,980,294 484,781,406 117,556,481 91,863,155 136,586,123 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Receivables: Employer contribution Accrued investment income and other receivables 5,489,592 1,161,112 Cash and cash equivalents 9,232,100 13,498,051 4,761,268 ------------ ------------ ------------ ------------ ------------ ----------- ----------- Total assets 949,121,952 782,799,011 764,967,937 490,703,786 117,556,481 91,863,155 136,586,123 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Liabilities: Payables for outstanding purchases 6,340,318 Accrued expenses and other payables 1,480,875 1,200,471 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Total liabilities 7,821,193 1,200,471 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Net assets available for plan benefits $949,121,952 $782,799,011 $757,146,744 $489,503,315 $117,556,481 $91,863,155 $136,586,123 ============ ============ ============ ============ ============ =========== ============ Percentage of Master Trust that 12.6% 7.7% 8.1% 8.0% 5.9% 7.0% 5.8% are plan assets of the Raytheon Savings and Investment Plan for Specified Hourly Payroll Employees. *Represents more than 5% of net assets available for plan benefits. N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund, and Retirement Money Market Fund are not available for the Raytheon Savings and Investment Plan for Specified Hourly Payroll Employees. 16 Templeton Investment Retirement Foreign I Grade Money Loan Fund Bond Fund Market Fund Fund Total Assets: Investments: At contract value: Bankers Trust* $ 351,035,073 Prudential Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* 782,799,011 Raytheon Company Common Stock* 745,980,294 BT Pyramid Equity Index Fund* 484,781,406 Fidelity Balance Fund 117,556,481 Fidelity Magellan Fund 91,863,155 Fidelity Blue Chip Fund 136,586,123 Templeton Foreign I Fund $5,471,176 5,471,176 Fidelity Investment Grade Bond Fund $1,548,125 1,548,125 Fidelity Retirement Money Market Fund $12,186,085 12,186,085 Loans receivable from participants $166,395,767 166,395,767 ---------- ---------- ----------- ------------ -------------- Total investments 5,471,176 1,548,125 12,186,085 166,395,767 3,485,057,475 ---------- ---------- ----------- ------------ -------------- Receivables: Employer contribution 4,015,100 4,015,100 Accrued investment income and other receivables 6,650,704 Cash and cash equivalents 27,491,419 ---------- ---------- ----------- ------------ -------------- Total assets 5,471,176 1,548,125 16,201,185 166,395,767 3,523,214,698 ---------- ---------- ----------- ------------ -------------- Liabilities: Payables for outstanding purchases 6,340,318 Accrued expenses and other payables 2,681,346 ---------- ---------- ----------- ------------ -------------- Total liabilities 9,021,664 ---------- ---------- ----------- ------------ -------------- Net assets available for plan benefits $5,471,176 $1,548,125 $16,201,185 $166,395,767 $3,514,193,034 ========== ========== =========== ============ ============== Percentage of Master Trust that are N/A N/A N/A 18.1% 9.4% plan assets of the Raytheon Savings and Investment Plan for Specified Hourly Payroll Employees *Represents more than 5% of net assets available for plan benefits N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund, and Retirement Money Market Fund are not available for the Raytheon Savings and Investment Plan for Specified Hourly Payroll Employees.
17 I. Master Trust, continued: The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1996:
Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $339,670,440 Prudential Insurance Company of America* 210,594,065 Metropolitan Life Insurance Company* 350,310,646 At fair value: Fidelity Equity Income Fund * $578,166,630 Raytheon Company Common Stock* $671,136,043 BT Pyramid Equity Index Fund* $307,555,916 Fidelity Balance Fund $83,265,065 Fidelity Magellan Fund $50,454,961 Fidelity Blue Chip Fund Loans receivable from participants* ------------ ------------ ------------ ------------ ----------- ----------- Total investments 900,575,151 578,166,630 671,136,043 307,555,916 83,265,065 50,454,961 ------------ ------------ ------------ ------------ ----------- ----------- Receivables: Accrued investment income 39,737 13,686 Cash and cash equivalents 14,633,134 10,145,818 3,541,437 ------------ ------------ ------------ ------------ ----------- ----------- Total assets 915,208,285 578,166,630 681,321,598 311,111,039 83,265,065 50,454,961 ------------ ------------ ------------ ------------ ----------- ----------- Liabilities: Payables for outstanding purchases 2,682,835 ------------ ------------ ------------ ------------ ----------- ----------- Total liabilities 2,682,835 ------------ ------------ ------------ ------------ ----------- ----------- Net assets available for plan benefits $915,208,285 $578,166,630 $678,638,763 $311,111,039 $83,265,065 $50,454,961 ============ ============ ============ ============ =========== =========== Percentage of Master Trust that are 12.7% 7.6% 8.7% 8.1% 6.0% 6.8% plan assets of the Raytheon Saving and Investment Plan for Specified Hourly Payroll Employees *Represents more than 5% of net assets available for plan benefits 18 Blue Chip Loan Fund Fund Total Assets: Investments: At contract value: Bankers Trust* $339,670,440 Prudential Insurance Company of America* 210,594,065 Metropolitan Life Insurance Company* 350,310,646 At fair value: Fidelity Equity Income Fund * 578,166,630 Raytheon Company Common Stock* 671,136,043 BT Pyramid Equity Index Fund* 307,555,416 Fidelity Balance Fund 83,265,065 Fidelity Magellan Fund 50,454,961 Fidelity Blue Chip Fund $67,866,240 67,866,240 Loans receivable from participants* $144,824,714 144,824,714 ----------- ------------ -------------- Total investments 67,866,240 144,824,714 2,803,844,720 ----------- ------------ -------------- Receivables: Accrued investment income 53,423 Cash and cash equivalents 28,320,389 ----------- ------------ -------------- Total assets 67,866,240 144,824,714 2,832,218,532 ----------- ------------ -------------- Liabilities: Payables for outstanding purchases 2,682,835 ----------- ------------ -------------- Total liabilities 2,682,835 ----------- ------------ -------------- Net assets available for plan benefits $67,866,240 $144,824,714 $2,829,535,697 =========== ============ ============== Percentage of Master Trust that are 5.7% 19.3% 10.1% plan assets of the Raytheon Savings and Investment Plan for Specified Hourly Payroll Employees. *Represents more than 5% of net assets available for plan benefits.
19 I. Master Trust, continued: The following is a summary of investment income by fund under the Master Trust for the year ended December 31, 1997:
Fixed Raytheon Income Common Stock Balanced Magellan Blue Chip Fund Equity Fund Stock Fund Index Fund Fund Fund Fund Investment income: Net appreciation (depreciation) of assets $ (191,924) $132,974,182 $30,715,963 $109,162,707 $ 6,388,316 $ 9,026,047 $15,474,118 Interest 62,319,073 673,934 312,511 Dividends 42,443,971 11,118,152 13,680,351 5,217,835 6,302,875 ----------- ------------ ----------- ------------ ----------- ----------- ----------- Total investment income/(loss) $62,127,149 $175,418,153 $42,508,049 $109,475,218 $20,068,667 $14,243,882 $21,776,993 =========== ============ =========== ============ =========== =========== =========== 19 Templeton Investment Retirement Foreign I Grade Money Loan Fund Bond Fund Market Fund Fund Total Investment income: Net appreciation (depreciation) of assets $(826,396) $22,581 $302,745,594 Interest $10,848,204 74,153,722 Dividends 549,717 36,337 $266,835 79,616,073 --------- ------- ------- ----------- ------------ Total investment income/(loss) $(276,679) $58,918 $266,835 $10,848,204 $456,515,389 ========= ======= ======== =========== ============
EX-99 6 1 EXHIBIT 99.2a CONSENT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Raytheon Company We consent to the incorporation by reference in the Registration Statement of Raytheon Company on Form S-8 (File No. 333-56117) of our report dated May 29, 1998 on our audits of the financial statements of the Raytheon Savings and Investment Plan for Specified Hourly Payroll Employees as of December 31, 1997 and 1996 and for the year ended December 31, 1997, which report is included in this annual report on Form 10-K/A. Coopers & Lybrand LLP Boston, Massachusetts June 29, 1998 EX-99 7 1 EXHIBIT 99.3 RAYTHEON EMPLOYEE SAVINGS AND INVESTMENT PLAN FINANCIAL STATEMENTS TO ACCOMPANY 1997 FORM 5500 ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN UNDER ERISA OF 1974 FOR THE YEAR ENDED DECEMBER 31, 1997 The supplemental schedules required to accompany the Plan's Form 5500 are not required since the Plan's assets are held in a Master Trust. Accordingly, detailed financial information, including the supplemental schedules, must be filed separately with the Department of Labor by the plan administrator. REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Raytheon Company: We have audited the accompanying statements of net assets available for plan benefits of the Raytheon Employee Savings and Investment Plan (the "Plan") as of December 31, 1997 and 1996, and the related statement of changes in net assets available for plan benefits for the year ended December 31, 1997. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Plan as of December 31, 1997 and 1996, and the changes in net assets available for plan benefits for the year ended December 31, 1997 in conformity with generally accepted accounting principles. Coopers & Lybrand LLP Boston, Massachusetts May 29, 1998 2 RAYTHEON EMPLOYEE SAVINGS AND INVESTMENT PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS as of December 31, 1997 and 1996 1997 1996 Assets: Master trust investments: At contract value (Notes B, E and H) $20,126,493 $12,229,251 At fair value (Notes B, F and H) 41,496,932 24,989,334 ----------- ----------- 61,623,425 37,218,585 ----------- ----------- Receivables: Accrued investment income and other receivables 79,759 15,071 Cash and cash equivalents 422,687 345,294 ----------- ----------- Total assets 62,125,871 37,578,950 ----------- ----------- Liabilities: Payable for outstanding purchases 72,220 29,112 Accrued expenses and other payables 34,682 15,104 ----------- ----------- Total liabilities 106,902 44,216 ----------- ----------- Net assets available for plan benefits $62,018,969 $37,534,734 =========== =========== The accompanying notes are an integral part of the financial statements. 3 RAYTHEON EMPLOYEE SAVINGS AND INVESTMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS for the year ended December 31, 1997 Additions to net assets attributable to: Investment income (Notes B, E and H): Net appreciation of investments $ 4,772,686 Interest 1,613,198 Dividends 1,412,484 ----------- 7,798,368 ----------- Contributions and deferrals: Employee deferrals 18,694,367 Employer contributions 5,135,516 Transfers (Note G) 120,755 ----------- 23,950,638 ----------- Total additions 31,749,006 ----------- Deductions from net assets attributable to: Distributions to participants 5,963,118 Administrative expenses 12,997 Transfers (Note G) 1,288,656 ----------- Total deductions 7,264,771 ----------- Increase in net assets 24,484,235 Net assets available for plan benefits, beginning of year 37,534,734 ----------- Net assets available for plan benefits, end of year $62,018,969 =========== The accompanying notes are an integral part of the financial statements. 4 A. Description of Plan: General The following description of the Raytheon Employee Savings and Investment Plan (the "Plan"), provides only general information. Participants should refer to the plan document for a complete description of the Plan's provisions. The Plan is a defined contribution plan and covers the employees of the Raytheon Support Services Company, the Raytheon Aerospace Support Service Company, and the Range Systems Engineer Support Company, wholly-owned subsidiaries of Raytheon Company (the "Company"). To participate in the Plan, eligible employees must have three months of service and may enter the Plan only on the first day of each month. The purpose of the Plan is to provide participants with a tax-effective means of meeting both short- and long-term investment objectives. The Plan is intended to be a "qualified cash or deferred arrangement" under Sections 401(a) and 401(k) of the Internal Revenue Code (the "Code"). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan's investments are held in the Raytheon Company Master Trust for Defined Contribution Plans ("Master Trust") with the assets of other defined contribution plans of Raytheon Company and subsidiaries. The trustee of the Master Trust maintains a separate account reflecting the equitable share in the Trust of each plan. Investment income and administrative expenses relating to the Master Trust are allocated to the individual plan based upon average monthly balances invested by each plan. Contributions and Deferrals Eligible employees are allowed to defer to the Plan up to 17% of their salaries. In 1995, the Company began to make qualified nonelective contributions (QNECs) to certain accounts based on specific employee agreements. In 1996, matching contributions under a specific agreement were made for certain employees. As of December 31, 1997, the annual employee deferral for a participant cannot exceed $9,500. Rollover contributions from other qualified plans are accepted by the Plan. Participants may invest their deferrals in increments of 1% in any combination of seven funds: (a) a Fixed Income Fund under which assets are invested primarily in contracts providing for fixed rates of interest for specified periods of time, (b) an Equity Fund which invests in shares of a mutual fund which consists primarily of income-producing equity securities, (c) a Raytheon Common Stock Fund which invests in shares of Raytheon Company Class B common stock, (d) a Stock Index Fund which invests in a commingled pool consisting primarily of equity securities and is designed to track the S&P 500 Index, (e) a Balanced Fund which invests in shares of a mutual fund which consists primarily of equity securities, bonds and money market instruments, (f) the Magellan Fund, a growth fund which invests primarily in equities of companies of all types and sizes, and (g) the Blue Chip Fund, a growth fund which invests primarily in equities of well known and established companies. Dividends and distributions from investments of the Equity Fund, the Raytheon Common Stock Fund, the Stock Index Fund, the Balanced Fund, the Magellan Fund and the Blue Chip Fund are reinvested in their respective funds; stock dividends, stock splits and similar changes are also reflected in the funds. 5 Participant Accounts Each participant's account is credited with the participant's deferral, any applicable employer contributions (QNECs or matching contributions) and an allocation of plan earnings. Plan earnings are allocated based on account balances by fund. Vesting Participants are immediately vested in their voluntary deferrals and employer contributions plus actual earnings thereon. Distributions to Participants A participant may withdraw all or a portion of deferrals, employer contributions and related earnings upon attainment of age 59 1/2. For reasons of financial hardship, as defined in the Plan document, a participant may withdraw all or a portion of deferrals. On termination of employment, a participant will receive a lump-sum distribution unless the vested account is valued in excess of $3,500 and the participant elects to defer distribution. A retiree or a beneficiary of a deceased participant may defer the distribution until January of the year following attainment of age 65. Loans to Participants A participant may borrow against a portion of the balance in the participant's account, subject to certain restrictions. The maximum amount of a loan is the lesser of one-half of the participant's account balance or $50,000. The minimum loan which may be granted is $500. The interest rate applied is equal to the prime rate published in the Wall Street Journal on the first business day in June and December of each year. Loans must be repaid over a period of up to 5 years by means of payroll deductions. In certain cases, the repayment period may be extended up to 15 years. Interest paid to the Plan on loans to participants is credited to the borrower's account in the investment fund to which repayments are made. Administrative Expenses Substantially all expenses of administering the Plan are paid by the plan participants. B. Summary of Significant Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting. The Plan's investment contracts are fully benefit-responsive and are therefore included in the financial statements at their contract value, defined as net employee contributions plus interest earned on the underlying investments at contracted rates. Because the investment contracts are fully benefit-responsive, contract values approximate fair value. Investments in mutual funds and the commingled pool are valued at the closing net asset value reported on the last business day of the year. Investments in securities (common stocks) traded on a national securities exchange are valued at the last reported sales price on the last business day of the year. Cash equivalents are short-term money market instruments and are valued at cost which approximates fair value. 6 Security transactions are recorded on trade date. Except for its investment contracts (Note E), the Plan's investments are held by bank-administered trust funds. Payables for outstanding security transactions represent trades which have occurred but have not yet settled. The Plan presents in the statement of changes in net assets the net appreciation (depreciation) in the fair value of its investments which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. Dividend income is recorded on the ex-dividend date. Income from other investments is recorded as earned on an accrual basis. Benefits are recorded when paid. Certain items in the 1996 financial statements have been reclassified to conform to the 1997 presentation. The preparation of the financial statements in conformity with generally accepted accounting principles requires the Plan administrator to make significant estimates and assumptions that affect the reported amounts of net assets and liabilities available for benefits at the date of the financial statements and the changes in net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from the estimates included in the financial statements. The Plan provides for various investment options in any combination of stocks, bonds, fixed income securities, mutual funds and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the statement of net assets available for plan benefits and the statement of changes in net assets available for plan benefits. C. Federal Income Tax Status: The Plan obtained its latest determination letter in June 1995, in which the Internal Revenue Service stated that the Plan, as submitted, was in compliance with the applicable requirements of the Internal Revenue Code. The Plan has been amended since receiving the determination letter. However, the Plan administrator and the Plan's legal counsel believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, no provision for income taxes has been included in the Plan's financial statements. 7 D. Plan Termination: Although it has not expressed any intention to do so, the Company reserves the right under the Plan at any time or times to discontinue its contributions and to terminate the Plan subject to the provisions of ERISA. In the event of plan termination, after payment of all expenses and proportional adjustment of accounts to reflect such expenses, fund losses or profits, and reallocations, each participant shall be entitled to receive any amounts then credited to his or her account. E. Investment Contracts: The Plan invests in collateralized fixed income investment portfolios (with no expiration date), three of which are managed by insurance companies and one of which is managed by an investment management firm. The credited interest rates are adjusted semiannually to reflect the experienced and anticipated yields to be earned on such investments, based on their book value. The annualized average yield and credited interest rates were as follows: Annualized Average Credited Yield Interest Rate For the year ended December 31, 1997: Bankers Trust (WBS 92-485) 6.95% 6.95% Metropolitan Life Insurance Company (GIC GA-12908) 6.86% 6.86% Metropolitan Life Insurance Company (GIC GA-13659) 6.43% 6.43% Prudential Asset Management Company (GIC 917163-001) 6.99% 6.99% For the year ended December 31, 1996: Bankers Trust (WBS 92-485) 6.87% 6.95% Metropolitan Life Insurance Company (GIC GA-12908) 6.77% 6.86% Metropolitan Life Insurance Company (GIC GA-13659) 6.36% 6.43% Prudential Asset Management Company (GIC 917163-001) 6.89% 6.99% The contract values are subject to limitations in certain situations including large workforce reductions and plan termination. In the financial statements, the two Metropolitan Life Insurance Company contracts are recorded as one investment option. F. Related Party Transactions: In accordance with the provisions of the Plan, Fidelity Management Trust Co. (the "Trustee") acts as the Plan's agent for purchases and sales of shares of Raytheon Company Class B common stock. These transactions are performed on the Master Trust level, For the Master Trust, purchases amounted to $200,689,057 and $158,515,882 and sales amounted to $102,165,608 and $38,523,792 for the years ended December 31, 1997 and 1996, respectively. G. Transfers: Transfers include transfers of participant accounts, individually and/or in groups, between the Plan and all other plans included in the Raytheon Company Master Trust for those participants and/or groups of participants who changed plans during the year. Transfers also include transfers of participant accounts, individually and/or in groups, between the Plan and similar savings plans of other companies for those participants who changed companies during the year. 8 H. Fund Data: The following is a summary of net assets available for plan benefits by fund as of December 31, 1997:
Raytheon Fixed Equity Common Stock Balanced Magellan Income Fund Fund Stock Fund Index Fund Fund Fund Assets: Master trust investments: At contract value: Bankers Trust* $ 7,516,950 Prudential Insurance Company of America* 4,662,435 Metropolitan Life Insurance Company* 7,947,108 At fair value: Fidelity Equity Income Fund* $9,742,698 Raytheon Company Common Stock* $ 8,495,820 BT Pyramid Equity Index Fund* $ 7,213,874 Fidelity Balanced Fund $2,923,744 Fidelity Magellan Fund* $3,910,859 Fidelity Blue Chip Fund* Loans receivable from participants* ----------- ---------- ----------- ----------- ---------- ---------- Total investments 20,126,493 9,742,698 8,495,820 7,213,874 2,923,744 3,910,859 ----------- ---------- ----------- ----------- ---------- ---------- Receivables: Accrued investment income and other receivables 62,529 17,230 Cash and cash equivalents 198,284 153,750 70,653 ----------- ---------- ----------- ----------- ---------- ---------- Total assets 20,324,777 9,742,698 8,712,099 7,301,757 2,923,744 3,910,859 ----------- ---------- ----------- ----------- ---------- ---------- Liabilities: Payable for outstanding purchases 72,220 Accrued expenses and other payables 16,868 17,814 ----------- ---------- ----------- ----------- ---------- ---------- Total liabilities 89,088 17,814 ----------- ---------- ----------- ----------- ---------- ---------- Net assets available for plan benefits $20,324,777 $9,742,698 $8,623,011 $7,283,943 $2,923,744 $3,910,859 =========== ========== ========== ========== ========== ========== *Represents more than 5% of net assets available for plan benefits 9 Blue Chip Fund Loan Fund Total Assets: Master trust investments: At contract value: Bankers Trust* $ 7,516,950 Prudential Insurance Company of America* 4,662,435 Metropolitan Life Insurance Company* 7,947,108 At fair value: Fidelity Equity Income Fund* 9,742,698 Raytheon Company Common Stock* 8,495,820 BT Pyramid Equity Index Fund* 7,213,874 Fidelity Balanced Fund 2,923,744 Fidelity Magellan Fund* 3,910,859 Fidelity Blue Chip Fund* $4,599,412 4,599,412 Loans receivable from participants* $4,610,525 4,610,525 ----------- ----------- ------------ Total investments 4,599,412 4,610,525 61,623,425 ----------- ----------- ------------ Receivables: Accrued investment income and other receivables 79,759 Cash and cash equivalents 422,687 ----------- ---------- ------------ Total assets 4,599,412 4,610,525 62,125,871 ----------- ---------- ------------ Liabilities: Payable for outstanding purchases 72,220 Accrued expenses and other payables 34,682 ----------- ---------- ------------ Total liabilities 106,902 ----------- ---------- ------------ Net assets available for plan benefits $4,599,412 $4,610,525 $62,018,969 =========== ========== ============ *Represents more than 5% of net assets available for plan benefits
10 H. Fund Data: The following is a summary of net assets available for plan benefits by fund as of December 31, 1996:
Raytheon Fixed Equity Common Stock Balanced Magellan Income Fund Fund Stock Fund Index Fund Fund Fund Assets: Master trust investments: At contract value: Bankers Trust* $ 4,612,540 Prudential Insurance Company of America* 2,859,737 Metropolitan Life Insurance Company* 4,756,974 At fair value: Fidelity Equity Income Fund* $5,454,189 Raytheon Company Common Stock* $7,282,577 BT Pyramid Equity Index Fund* $3,169,184 Fidelity Balanced Fund* $1,978,807 Fidelity Magellan Fund* $2,053,270 Fidelity Blue Chip Fund* Loans receivable from participants* ----------- ---------- ----------- ----------- ---------- ---------- Total investments 12,229,251 5,454,189 7,282,577 3,169,184 1,978,807 2,053,270 ----------- ---------- ----------- ----------- ---------- ---------- Receivables: Accrued investment income and other receivables 10,726 4,345 Cash and cash equivalents 198,709 110,093 36,492 ----------- ---------- ----------- ----------- ---------- ---------- Total assets 12,427,960 5,454,189 7,403,396 3,210,021 1,978,807 2,053,270 ----------- ---------- ----------- ----------- ---------- ---------- Liabilities: Payable for outstanding purchases 29,112 Accrued expenses and other payables 10,174 4,930 ----------- ---------- ----------- ----------- ---------- ---------- Total liabilities 39,286 4,930 ----------- ---------- ----------- ----------- ---------- ---------- Net assets available for plan benefits $12,427,960 $5,454,189 $7,364,110 $3,205,091 $1,978,807 $2,053,270 =========== ========== ========== ========== ========== ========== *Represents more than 5% of net assets available for plan benefits 11 Blue Chip Fund Loan Fund Total Assets: Master trust investments: At contract value: Bankers Trust* $ 4,612,540 Prudential Insurance Company of America* 2,859,737 Metropolitan Life Insurance Company* 4,756,974 At fair value: Fidelity Equity Income Fund* 5,454,189 Raytheon Company Common Stock* 7,282,577 BT Pyramid Equity Index Fund* 3,169,184 Fidelity Balanced Fund* 1,978,807 Fidelity Magellan Fund* 2,053,270 Fidelity Blue Chip Fund* $2,340,883 2,340,883 Loans receivable from participants* $2,710,424 2,710,424 ----------- ----------- ------------ Total investments 2,340,883 2,710,424 37,218,585 ----------- ----------- ------------ Receivables: Accrued investment income and other receivables 15,071 Cash and cash equivalents 345,294 ---------- ---------- ------------ Total assets 2,340,883 2,710,424 37,578,950 ---------- ---------- ------------ Liabilities: Payable for outstanding purchases 29,112 Accrued expenses and other payables 15,104 ---------- ---------- ------------ Total liabilities 44,216 ---------- ---------- ------------ Net assets available for plan benefits $2,340,883 $2,710,424 $37,534,734 ========== ========== ============ *Represents more than 5% of net assets available for plan benefits
12
H. Fund Data, continued: The following is a summary of changes in net assets available for plan benefits by fund for the year ended December 31, 1997: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Additions to net assets attributable to: Investment income: Net appreciation of investments $1,535,491 $ 544,487 $1,521,421 $ 181,174 $ 420,464 Interest $ 1,350,882 7,698 4,699 Dividends 499,994 126,638 345,201 225,651 ----------- ----------- ---------- ---------- ---------- ---------- 1,350,882 2,035,485 678,823 1,526,120 526,375 646,115 ----------- ----------- ---------- ---------- ---------- ---------- Contributions and deferrals: Employee deferrals 11,593,204 1,521,772 2,054,602 1,119,603 540,048 832,939 Employer contributions 3,042,770 386,957 662,465 319,985 120,312 266,595 Transfers ----------- ----------- ---------- ---------- ---------- ---------- 14,635,974 1,908,729 2,717,067 1,439,588 660,360 1,099,534 ----------- ----------- ---------- ---------- ---------- ---------- Total additions 15,986,856 3,944,214 3,395,890 2,965,708 1,186,735 1,745,649 ----------- ----------- ---------- ---------- ---------- ---------- Deductions from net assets attributable to: Distributions to participants 3,001,605 627,971 730,222 307,056 212,666 358,805 Administrative expenses 5,105 2,078 2,323 1,413 673 644 Transfers 232,613 136,068 460,056 155,495 84,763 127,636 ----------- ---------- ---------- ---------- ---------- ---------- Total deductions 3,239,323 766,117 1,192,601 463,964 298,102 487,085 ----------- ---------- ---------- ---------- ---------- ---------- Interfund transfers (4,850,716) 1,110,412 (944,388) 1,577,108 56,304 599,025 ----------- ---------- ---------- ---------- ---------- ---------- Increase in net assets 7,896,817 4,288,509 1,258,901 4,078,852 944,937 1,857,589 Net assets available for plan benefits, end of year 12,427,960 5,454,189 7,364,110 3,205,091 1,978,807 2,053,270 ----------- ---------- ---------- ---------- ---------- ---------- Net assets available for plan benefits, end of year $20,324,777 $9,742,698 $8,623,011 $7,283,943 $2,923,744 $3,910,859 =========== ========== ========== ========== ========== ========== 13 Blue Chip Loan Fund Fund Total Additions to net assets attributable to: Investment income: Net appreciation of investments $ 569,649 $ 4,772,686 Interest $ 249,919 1,613,198 Dividends 215,000 1,412,484 ---------- ---------- ----------- 784,649 249,919 7,798,368 ---------- ---------- ----------- Contributions and deferrals: Employee deferrals 995,486 36,713 18,694,367 Employer contributions 336,432 5,135,516 Transfers 120,755 120,755 ---------- ---------- ----------- 1,331,918 157,468 23,950,638 ---------- ---------- ----------- Total additions 2,116,567 407,387 31,749,006 ---------- ---------- ----------- Deductions from net assets attributable to: Distributions to participants 261,871 462,922 5,963,118 Administrative expenses 761 12,997 Transfers 92,025 1,288,656 ---------- ---------- ----------- Total deductions 354,657 462,922 7,264,771 ---------- ---------- ----------- Interfund transfers 496,619 1,955,636 -- ---------- ---------- ----------- Increase in net assets 2,258,529 1,900,101 24,484,235 Net assets available for plan benefits, beginning of year 2,340,883 2,710,424 37,534,734 ---------- ---------- ----------- Net assets available for plan benefits, end of year $4,599,412 $4,610,525 $62,018,969 ========== ========== ===========
14 J. Master Trust: All plan investments are included under the Master Trust. At December 31, 1997, assets of the Plan represented 1.8% of the total assets under the Master Trust. This has increased from 1.3% at December 31, 1996. The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1997:
Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Blue Chip Fund Fund Stock Fund Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $351,035,073 Prudential Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* $782,799,011 Raytheon Company Common Stock* $745,980,294 BT Pyramid Equity Index Fund* $484,781,406 Fidelity Balance Fund $117,556,481 Fidelity Magellan Fund $91,863,155 Fidelity Blue Chip Fund $136,586,123 Templeton Foreign I Fund Fidelity Investment Grade Bond Fund Fidelity Retirement Money Market Fund Loans receivable from participants ------------ ------------ ------------ ------------ ------------ ----------- ------------ Total investments 939,889,852 782,799,011 745,980,294 484,781,406 117,556,481 91,863,155 136,586,123 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Receivables: Employer contribution Accrued investment income and other receivables 5,489,592 1,161,112 Cash and cash equivalents 9,232,100 13,498,051 4,761,268 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Total assets 949,121,952 782,799,011 764,967,937 490,703,786 117,556,481 91,863,155 136,586,123 ------------ ------------ ------------ ------------ ------------ ----------- ----------- Liabilities: Payables for outstanding purchases 6,340,318 Accrued expenses and other payables 1,480,875 1,200,471 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Total liabilities 7,821,193 1,200,471 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Net assets available for plan benefits $949,121,952 $782,799,011 $757,146,744 $489,503,315 $117,556,481 $91,863,155 $136,586,123 ============ ============ ============ ============ ============ =========== ============ Percentage of Master Trust that are plan assets of the Raytheon Employee Savings and Investment Plan 2.1% 1.2% 1.1% 1.5% 2.5% 4.3% 3.4% *Represents more than 5% of net assets available for plan benefits. N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund, and Retirement Money Market Fund are not available for the Raytheon Employee Savings and Investment Plan. 15 Templeton Investment Retirement Foreign I Grade Money Loan Fund Bond Fund Market Fund Fund Total Assets: Investments: At contract value: Bankers Trust* $ 351,035,073 Prudential Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* 782,799,011 Raytheon Company Common Stock* 745,980,294 BT Pyramid Equity Index Fund* 484,781,406 Fidelity Balanced Fund 117,556,481 Fidelity Magellan Fund 91,863,155 Fidelity Blue Chip Fund 136,586,123 Templeton Foreign I Fund $5,471,176 5,471,176 Fidelity Investment Grade Bond Fund $1,548,125 1,548,125 Fidelity Retirement Money Market Fund $12,186,085 12,186,085 Loans receivable from participants $166,395,767 166,395,767 ---------- ---------- ----------- ------------ -------------- Total investments 5,471,176 1,548,125 12,186,085 166,395,767 3,485,057,475 ---------- ---------- ----------- ------------ -------------- Receivables: Employer contribution 4,015,100 4,015,100 Accrued investment income and other receivables 6,650,704 Cash and cash equivalents 27,491,419 ---------- ---------- ----------- ------------ -------------- Total assets 5,471,176 1,548,125 16,201,185 166,395,767 3,523,214,698 ---------- ---------- ----------- ------------ -------------- Liabilities: Payables for outstanding purchases 6,340,318 Accrued expenses and other payables 2,681,346 ---------- ---------- ----------- ------------ -------------- Total liabilities 9,021,664 ---------- ---------- ----------- ------------ -------------- Net assets available for plan benefits $5,471,176 $1,548,125 $16,201,185 $166,395,767 $3,514,193,034 ========== ========== =========== ============ ============== Percentage of Master Trust that are N/A N/A N/A 2.8% 1.8% plan assets of the Raytheon Employee Savings and Investment Plan *Represents more than 5% of net assets available for plan benefits N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund, and Retirement Money Market Fund are not available for the Raytheon Employee Savings and Investment Plan.
16 I. Master Trust, continued: The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1996:
Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $339,670,440 Prudential Insurance Company of America* 210,594,065 Metropolitan Life Insurance Company* 350,310,646 At fair value: Fidelity Equity Income Fund * $578,166,630 Raytheon Company Common Stock* $671,136,043 BT Pyramid Equity Index Fund* $307,555,916 Fidelity Balanced Fund $83,265,065 Fidelity Magellan Fund $50,454,961 Fidelity Blue Chip Fund Loans receivable from participants* ------------ ------------ ------------ ------------ ----------- ----------- Total investments 900,575,151 578,166,630 671,136,043 307,555,916 83,265,065 50,454,961 ------------ ------------ ------------ ------------ ----------- ----------- Receivables: Accrued investment income 39,737 13,686 Cash and cash equivalents 14,633,134 10,145,818 3,541,437 ------------ ------------ ------------ ------------ ----------- ----------- Total assets 915,208,285 578,166,630 681,321,598 311,111,039 83,265,065 50,454,961 ------------ ------------ ------------ ------------ ----------- ----------- Liabilities: Payables for outstanding purchases 2,682,835 ------------ ------------ ------------ ------------ ----------- ----------- Total liabilities 2,682,835 ------------ ------------ ------------ ------------ ----------- ----------- Net assets available for plan benefits $915,208,285 $578,166,630 $678,638,763 $311,111,039 $83,265,065 $50,454,961 ============ ============ ============ ============ =========== =========== Percentage of Master Trust that are 1.4% 0.9% 1.1% 1.0% 2.4% 4.1% plan assets of the Raytheon Employee Savings and Investment Plan *Represents more than 5% of net assets available for plan benefits 17 Blue Chip Loan Fund Fund Total Assets: Investments: At contract value: Bankers Trust* $339,670,440 Prudential Insurance Company of America* 210,594,065 Metropolitan Life Insurance Company* 350,310,646 At fair value: Fidelity Equity Income Fund * 578,166,630 Raytheon Company Common Stock* 671,136,043 BT Pyramid Equity Index Fund* 307,555,916 Fidelity Balanced Fund 83,265,065 Fidelity Magellan Fund 50,454,961 Fidelity Blue Chip Fund $67,866,240 67,866,240 Loans receivable from participants* $144,824,714 144,824,714 ----------- ------------ -------------- Total investments 67,866,240 144,824,714 2,803,844,720 ----------- ------------ -------------- Receivables: Accrued investment income 53,423 Cash and cash equivalents 28,320,389 ----------- ------------ -------------- Total assets 67,866,240 144,824,714 2,832,218,532 ----------- ------------ -------------- Liabilities: Payables for outstanding purchases 2,682,835 ----------- ------------ -------------- Total liabilities 2,682,835 ----------- ------------ -------------- Net assets available for plan benefits $67,866,240 $144,824,714 $2,829,535,697 =========== ============ ============== Percentage of Master Trust that are 3.4% 1.9% 1.3% plan assets of the Raytheon Employees Savings and Investment Plan *Represents more than 5% of net assets available for plan benefits
17 I. Master Trust, continued: The following is a summary of investment income by fund under the Master Trust for the year ended December 31, 1997:
Fixed Raytheon Income Common Stock Balanced Magellan Blue Chip Fund Equity Fund Stock Fund Index Fund Fund Fund Fund Investment income: Net appreciation (depreciation) of assets $ (191,924) $132,974,182 $30,715,963 $109,162,707 $ 6,388,316 $ 9,026,047 $15,474,118 Interest 62,319,073 673,934 312,511 Dividends 42,443,971 11,118,152 13,680,351 5,217,835 6,302,875 ----------- ------------ ----------- ------------ ----------- ----------- ----------- Total investment income/(loss) $62,127,149 $175,418,153 $42,508,049 $109,475,218 $20,068,667 $14,243,882 $21,776,993 =========== ============ =========== ============ =========== =========== =========== 17 Templeton Investment Retirement Foreign I Grade Money Loan Fund Bond Fund Market Fund Fund Total Investment income: Net appreciation (depreciation) of assets $(826,396) $22,581 $302,745,594 Interest $10,848,204 74,153,722 Dividends 549,717 36,337 $266,835 79,616,073 --------- ------- ------- ----------- ------------ Total investment income/(loss) $(276,679) $58,918 $266,835 $10,848,204 $456,515,389 ========= ======= ======== =========== ============
EX-99 8 1 EXHIBIT 99.3a CONSENT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Raytheon Company We consent to the incorporation by reference in the Registration Statement of Raytheon Company on Form S-8 (File No. 333-56117) of our report dated May 29, 1998 on our audits of the financial statements of the Raytheon Employee Savings and Investment Plan as of December 31, 1997 and 1996 and for the year ended December 31, 1997, which report is included in this annual report on Form 10-K/A. Coopers & Lybrand LLP Boston, Massachusetts June 29, 1998 EX-99 9 1 EXHIBIT 99.4 RAYTHEON SAVINGS AND INVESTMENT PLAN FOR PUERTO RICO BASED EMPLOYEES FINANCIAL STATEMENTS TO ACCOMPANY 1997 FORM 5500 ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN UNDER ERISA OF 1974 FOR THE YEAR ENDED DECEMBER 31, 1997 The supplemental schedules required to accompany the Plan's Form 5500 are not required since the Plan's assets are held in a Master Trust. Accordingly, detailed financial information, including the supplemental schedules, must be filed separately with the Department of Labor by the plan administrator. REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Raytheon Catalytic, Inc.: We have audited the accompanying statements of net assets available for plan benefits of the Raytheon Savings and Investment Plan for Puerto Rico Based Employees (the "Plan") as of December 31, 1997 and 1996, and the related statement of changes in net assets available for plan benefits for the year ended December 31, 1997. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Plan as of December 31, 1997 and 1996, and the changes in net assets available for plan benefits for the year ended December 31, 1997 in conformity with generally accepted accounting principles. Coopers & Lybrand LLP Boston, Massachusetts May 29, 1998 2 RAYTHEON SAVINGS AND INVESTMENT PLAN FOR PUERTO RICO BASED EMPLOYEES STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS as of December 31, 1997 and 1996 1997 1996 Assets: Master trust investments: At contract value (Notes B, E and I) $ 77,879 $ 45,344 At fair value (Notes B, F and I) 700,111 334,722 -------- -------- 777,990 380,066 -------- -------- Receivables: Accrued investment income and other receivables 1,775 275 Cash and cash equivalents 5,598 3,444 -------- -------- Total assets 785,363 383,785 -------- -------- Liabilities: Payable for security purchases 1,723 571 Accrued expenses and other payables 696 273 -------- -------- Total liabilities 2,419 844 -------- -------- Net assets available for plan benefits $782,944 $382,941 ======== ======== The accompanying notes are an integral part of the financial statements. 3 RAYTHEON SAVINGS AND INVESTMENT PLAN FOR PUERTO RICO BASED EMPLOYEES STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS for the year ended December 31, 1997 Additions to net assets attributable to: Investment income (Notes B, E and I): Net appreciation of investments $ 63,424 Interest 7,980 Dividends 19,357 -------- 90,761 -------- Contributions and deferrals: Employee deferrals 215,430 Employer contributions 73,622 Transfers (Note H) 50,664 -------- 339,716 -------- Total additions 430,477 -------- Deductions from net assets attributable to: Distributions to participants 25,812 Administrative expenses 132 Transfers (Note H) 4,530 -------- Total deductions 30,474 -------- Increase in net assets 400,003 Net assets available for plan benefits, beginning of year 382,941 -------- Net assets available for plan benefits, end of year $782,944 ======== The accompanying notes are an integral part of the financial statements. 4 A. Description of Plan: General The following description of the Raytheon Savings and Investment Plan for Puerto Rico Based Employees (the "Plan") provides only general information. Participants should refer to the plan document for a complete description of the Plan's provisions. The Plan is a defined contribution plan covering certain Puerto Rico based employees of Raytheon Catalytic, Inc., a wholly-owned subsidiary of Raytheon Company (the "Company"). To participate in the Plan, eligible employees must have three months of service and may enter the Plan only on the first pay date of each month. The purpose of the Plan is to provide participants with a tax-effective means of meeting both short- and long-term investment objectives. The Plan, effective as of January 1, 1995, is intended to comply with all the requirements for a "qualified profit sharing plan" under the Revenue Code of Puerto Rico (the "Code"). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). All of the Plan's investments are held in the Raytheon Company Master Trust for Defined Contribution Plans ("Master Trust") with the assets of other defined contribution plans of Raytheon Company and subsidiaries. The trustee of the Master Trust maintains a separate account reflecting the equitable share in the Trust of each plan. Investment income and administrative expenses relating to the Master Trust are allocated to the individual plans based upon average monthly balances invested by each plan. Contributions and Deferrals Eligible employees are allowed to defer to the Plan up to 15% of their salaries. The Company contributes amounts equal to 50% of each participant's deferral, up to a maximum of 3% of the participant's salary. As of December 31, 1997, the annual employee deferral for a participant cannot exceed $7,000. Rollover contributions from other qualified plans subject to the Code are accepted by the Plan. Participants may invest their deferrals in increments of 1% in any combination of seven funds: (a) a Fixed Income Fund under which assets are invested primarily in contracts providing for fixed rates of interest for specified periods of time, (b) an Equity Fund which invests in shares of a mutual fund which consists primarily of income-producing equity securities, (c) a Raytheon Common Stock Fund which invests in shares of Raytheon Company Class B common stock, (d) a Stock Index Fund which invests in a commingled pool consisting primarily of equity securities and is designed to track the S&P 500 Index, (e) a Balanced Fund which invests in shares of a mutual fund which consists primarily of equity securities, bonds and money market instruments, (f) the Magellan Fund, a growth fund which invests primarily in equities of companies of all types and sizes, and (g) the Blue Chip Fund, a growth fund which invests primarily in equities of well known and established companies. Dividends and distributions from investments of the Equity Fund, the Raytheon Common Stock Fund, the Stock Index Fund, the Balanced Fund, the Magellan Fund and the Blue Chip Fund are reinvested in their respective funds; stock dividends, stock splits and similar changes are also reflected in the funds. 5 Participant Accounts Each participant's account is credited with the participant's deferral, the Company's contributions and an allocation of plan earnings. Plan earnings are allocated based on account balances by fund. Vesting Participants are immediately vested in their voluntary deferrals plus actual earnings thereon. Vesting requirements for employer contributions plus earnings thereon may vary depending upon when an employee became eligible to participate in the Plan. Vesting generally occurs upon the earliest of the completion of five years of service or three years of plan participation or upon retirement, death, disability, or attainment of retirement age. Forfeitures of the nonvested portions of terminated participants' accounts are used to reduce required contributions of the Company. Distributions to Participants A participant may withdraw all or a portion of deferrals, employer contributions and related earnings upon attainment of age 59-1/2. For reasons of financial hardship, as defined in the Plan document, a participant may withdraw all or a portion of deferrals. On termination of employment, a participant will receive a lump-sum distribution unless the vested account is valued in excess of $3,500 and the participant elects to defer distribution. A retiree or a beneficiary of a deceased participant may defer the distribution until January of the year following attainment of age 65. Loans to Participants A participant may borrow against a portion of the balance in the participant's account, subject to certain restrictions. The maximum amount of a loan is one-half of the participant's account balance. The minimum loan which may be granted is $500. The interest rate applied is equal to the prime rate published in the Wall Street Journal on the first business day in June and December of each year. Loans must be repaid over a period of up to five years by means of payroll deductions. In certain cases, the repayment period may be extended up to 15 years. Interest paid to the Plan on loans to participants is credited to the borrower's account in the investment fund to which repayments are made. Administrative Expenses Substantially all expenses of administering the Plan are paid by the plan participants. B. Summary of Significant Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting. 6 The Plan's investment contracts are fully benefit-responsive and are therefore included in the financial statements at their contract value, defined as net contributions and deferrals plus interest earned on the underlying investments at contracted rates. Because the investment contracts are fully benefit-responsive, contract values approximate fair value. Investments in mutual funds and the commingled pool are valued at the closing net asset value reported on the last business day of the year. Investments in securities (common stocks) traded on a national securities exchange are valued at the last reported sales price on the last business day of the year. Cash equivalents are short-term money market instruments and are valued at cost which approximates fair value. Security transactions are recorded on trade date. Except for its investment contracts (Note E), the Plan's investments are held by bank-administered trust funds. Payables for outstanding security transactions represent trades which have occurred but have not yet settled. The Plan presents in the statement of changes in net assets the net appreciation (depreciation) in the fair value of its investments which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. Dividend income is recorded on the ex-dividend date. Income from other investments is recorded as earned on an accrual basis. Benefits are recorded when paid. Certain items in the 1996 financial statements have been reclassified to conform to the 1997 presentation. The preparation of the financial statements in conformity with generally accepted accounting principles requires the plan administrator to make significant estimates and assumptions that affect the reported amounts of net assets and liabilities available for benefits at the date of the financial statements and the changes in net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from the estimates included in the financial statements. The Plan provides for various investment options in any combination of stocks, bonds, fixed income securities, mutual funds and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the statement of net assets available for plan benefits and the statement of changes in net assets available for plan benefits. 7 C. Tax Status: The Plan obtained its latest determination letter in August 1996 in which the Treasury department of the Commonwealth of Puerto Rico stated that the Plan, as submitted, was in compliance with the applicable requirements of the Puerto Rico Income Tax Act of 1954, as amended. Since receiving the determination letter, the plan has been amended. The Plan administrator and the Plan's legal counsel believe that the Plan is designed and being operated in compliance with the applicable requirements of the aforementioned Act. Therefore, no provision for income taxes has been included in the Plan's financial statements. D. Plan Termination: Although it has not expressed any intention to do so, the Company reserves the right under the Plan at any time or times to discontinue its contributions and to terminate the Plan subject to the provisions of ERISA. In the event of plan termination, after payment of all expenses and proportional adjustment of accounts to reflect such expenses, fund losses or profits, and reallocations, each participant shall be entitled to receive any amounts then credited to his or her account. E. Investment Contracts: The Plan invests in collateralized fixed income investment portfolios (with no expiration date), three of which are managed by insurance companies and one of which is managed by an investment management firm. The credited interest rates are adjusted semiannually to reflect the experienced and anticipated yields to be earned on such investments, based on their book value. The annualized average yield and credited interest rates were as follows: Annualized Average Credited Yield Interest Rate For the year ended December 31, 1997: Bankers Trust (WBS 92-485) 6.95% 6.95% Metropolitan Life Insurance Company (GIC GA-12908) 6.86% 6.86% Metropolitan Life Insurance Company (GIC GA-13659) 6.43% 6.43% Prudential Asset Management Company (GIC 917163-001) 6.99% 6.99% For the year ended December 31, 1996: Bankers Trust (WBS 92-485) 6.87% 6.95% Metropolitan Life Insurance Company (GIC GA-12908) 6.77% 6.86% Metropolitan Life Insurance Company (GIC GA-13659) 6.36% 6.43% Prudential Asset Management Company (GIC 917163-001) 6.89% 6.99% The contract values are subject to limitations in certain situations including large workforce reductions and plan termination. In the financial statements, the two Metropolitan Life Insurance Company contracts are recorded as one investment option. 8 F. Related Party Transactions: In accordance with the provisions of the Plan, Fidelity Management Trust Company (the "Trustee") acts as the Plan's agent for purchases and sales of shares of Raytheon Company Class B common stock. These transactions are performed on the Master Trust level. For the Master Trust, purchases amounted to $200,689,057 and $158,515,882 and sales amounted to $102,165,608 and $38,523,792 for the years ended December 31, 1997 and 1996, respectively. G. Plan Amendment: In 1996, the Plan was amended to require all withdrawals from the Plan to be in cash. H. Transfers: Transfers include transfers of participant accounts, individually and/or in groups, between the Raytheon Savings and Investment Plan for Puerto Rico Based Employees and all other plans included in the Raytheon Company Master Trust for those participants and/or groups of participants who changed plans during the year. Transfers also include transfers of participant accounts, individually and/or in groups, between the Raytheon Saving and Investment Plan for Puerto Rico Based Employees and similar savings plans of other companies for those participants who changed companies during the year. 9 I. Fund Data: The following is a summary of net assets available for plan benefits by fund as of December 31, 1997:
Raytheon Blue Income Equity Stock Index Balanced Magellan Chip Loan Fund Fund Fund Fund Fund Fund Fund Fund Total Assets: Master trust investments: At contract value: Bankers Trust $29,087 $ 29,087 Prudential Insurance Company of America 18,041 18,041 Metropolitan Life Insurance Company 30,751 30,751 At fair value: Fidelity Equity Income* $214,116 214,116 Raytheon Company Common Stock* $202,655 202,655 BT Pyramid Equity Index Fund* $118,530 118,530 Fidelity Balanced Fund $32,784 32,784 Fidelity Magellan Fund* $40,215 40,215 Fidelity Blue Chip Fund $35,416 35,416 Loans receivable from participants* $56,395 56,395 ------- -------- -------- -------- ------- ------- ------- ------- -------- Total investments 77,879 214,116 202,655 118,530 32,784 40,215 35,416 56,395 777,990 ------- -------- -------- -------- ------- ------- ------- ------- -------- Receivables: Accrued investment income and other receivables 1,491 284 1,775 Cash and cash equivalents 767 3,667 1,164 5,598 ------- -------- -------- -------- ------- ------- ------- ------- -------- Total assets 78,646 214,116 207,813 119,978 32,784 40,215 35,416 56,395 785,363 ------- -------- -------- -------- ------- ------- ------- ------- -------- Liabilities: Payable for security purchases 1,723 1,723 Accrued expenses and other payables 402 294 696 ------- -------- -------- -------- ------- ------- ------- ------- -------- Total liabilities 2,125 294 2,419 ------- -------- -------- -------- ------- ------- ------- ------- -------- Net assets available for plan benefits $78,646 $214,116 $205,688 $119,684 $32,784 $40,215 $35,416 $56,395 $782,944 ======= ======== ======== ======== ======= ======= ======= ======= ======== *Represents more than 5% of net assets available for plan benefits
10
I. Fund Data, continued: The following is a summary of net assets available for plan benefits by fund as of December 31, 1996: Raytheon Blue Income Equity Stock Index Balanced Magellan Chip Loan Fund Fund Fund Fund Fund Fund Fund Fund Total Assets: Master trust investments: At contract value: Bankers Trust $17,103 $ 17,103 Prudential Insurance Company of America 10,603 10,603 Metropolitan Life Insurance Company 17,638 17,638 At fair value: Fidelity Equity Income* $ 85,935 85,935 Raytheon Company Common Stock* $142,804 142,804 BT Pyramid Equity Index Fund* $ 47,618 47,618 Fidelity Balanced Fund $ 8,896 8,896 Fidelity Magellan Fund* $ 9,640 9,640 Fidelity Blue Chip Fund $ 5,996 5,996 Loans receivable from participants* $33,833 33,833 ------- -------- -------- -------- ------- ------- ------- ------- -------- Total investments 45,344 85,935 142,804 47,618 8,896 9,640 5,996 33,833 380,066 ------- -------- -------- -------- ------- ------- ------- ------- -------- Receivables: Accrued investment income and other receivables 210 65 275 Cash and cash equivalents 737 2,159 548 3,444 ------- -------- -------- -------- ------- ------- ------- ------- -------- Total assets 46,081 85,935 145,173 48,231 8,896 9,640 5,996 33,833 383,785 ------- -------- -------- -------- ------- ------- ------- ------- -------- Liabilities: Payable for security purchases 571 571 Accrued expenses and other payables 199 74 273 ------- -------- -------- -------- ------- ------- ------- ------- -------- Total liabilities 770 74 844 ------- -------- -------- -------- ------- ------- ------- ------- -------- Net assets available for plan benefits $46,081 $ 85,935 $144,403 $ 48,157 $ 8,896 $ 9,640 $ 5,996 $33,833 $382,941 ======= ======== ======== ======== ======= ======= ======= ======= ======== *Represents more than 5% of net assets available for plan benefits
11 I. Fund Data, continued: The following is a summary of changes in net assets available for plan benefits by fund for the year ended December 31, 1997:
Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Blue Chip Loan Fund Fund Stock Fund Fund Fund Fund Fund Fund Total Additions to net assets attributable to: Investment income: Net appreciation of investments $ 24,283 $ 9,108 $ 24,294 $ 507 $ 2,851 $ 2,381 $ 63,424 Interest $ 5,711 186 78 $ 2,005 7,980 Dividends 10,093 3,021 2,714 2,203 1,326 19,357 ------- -------- ------- ------- ------- ------- ------- ------- -------- 5,711 34,376 12,315 24,372 3,221 5,054 3,707 2,005 90,761 ------- -------- ------- ------- ------- ------- ------- ------- -------- Contributions and deferrals: Employee deferrals 25,253 41,088 63,606 30,948 14,395 18,826 21,314 215,430 Employer contributions 14,351 13,052 22,235 11,330 1,926 5,992 4,736 73,622 Transfers 8,590 10,154 4,805 2,245 $24,870 50,664 ------- -------- ------- ------- ------- ------- ------- ------- -------- 39,604 62,730 95,995 42,278 21,126 27,063 26,050 24,870 339,716 ------- -------- ------- ------- ------- ------- ------- ------- -------- Total additions 45,315 97,106 108,310 66,650 24,347 32,117 29,757 26,875 430,477 ------- -------- ------- ------- ------- ------- ------- ------- -------- Deductions from net assets attributable to: Distributions to participants 8,441 931 4,135 200 (583) 688 12,000 25,812 Administrative expenses 16 35 46 22 4 5 4 132 Transfers 683 3,847 4,530 ------- -------- ------- ------- ------- ------- ------- ------- -------- Total deductions 9,140 966 4,181 4,069 (579) 693 4 12,000 30,474 Interfund transfers (3,610) 32,041 (42,844) 8,946 (1,038) (849) (333) 7,687 -- Increase in net assets 32,565 128,181 61,285 71,527 23,888 30,575 29,420 22,562 400,003 Net assets available for plan benefits, beginning of year 46,081 85,935 144,403 48,157 8,896 9,640 5,996 33,833 382,941 Net assets available for plan benefits, end of year $78,646 $214,116 $205,688 $119,684 $32,784 $40,215 $35,416 $56,395 $782,944 ======= ======== ======== ======== ======= ======= ======= ======= ========
12 J. Master Trust: All plan investments are included under the Master Trust. At December 31, 1997 and 1996, assets of the Plan represented less than 1% of the total assets under the Master Trust. The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1997:
Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Blue Chip Fund Fund Stock Fund Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $351,035,073 Prudential Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* $782,799,011 Common Stock* $745,980,294 Index Fund* $484,781,406 Fidelity Balanced Fund $117,556,481 Fidelity Magellan Fund $91,863,155 Fidelity Blue Chip Fund $136,586,123 Templeton Foreign I Fund Fidelity Investment Grade Bond Fund Fidelity Retirement Money Market Fund participants ------------ ------------ ------------ ------------ ------------ ----------- ------------ Total investments 939,889,852 782,799,011 745,980,294 484,781,406 117,556,481 91,863,155 136,586,123 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Receivables: Employer contribution Accrued investment income and other receivables 5,489,592 1,161,112 Cash and cash equivalents 9,232,100 13,498,051 4,761,268 Total assets 949,121,952 782,799,011 764,967,937 490,703,786 117,556,481 91,863,155 136,586,123 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Liabilities: Payables for outstanding purchases 6,340,318 Accrued expenses and other payables 1,480,875 1,200,471 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Total liabilities 7,821,193 1,200,471 Net assets available for plan benefits $949,121,952 $782,799,011 $757,146,744 $489,503,315 $117,556,481 $91,863,155 $136,586,123 ============ ============ ============ ============ ============ =========== ============ Percentage of Master Trust that ^ ^ ^ ^ ^ ^ ^ are plan assets of the Raytheon Savings and Investment Plan for Puerto Rico Based Employees *Represents more than 5% of net assets available for plan benefits ^Represents less than 1% of plan assets under the Master Trust N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund, and Retirement Money Market Fund are not available for the Raytheon Savings and Investment Plan for Puerto Rico Based Employees. 13 Templeton Investment Retirement Foreign I Grade Money Loan Fund Bond Fund Market Fund Fund Total Assets: Investments: At contract value: Bankers Trust* $ 351,035,073 Prudential Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* 782,799,011 Raytheon Company Common Stock* 745,980,294 BT Pyramid Equity Index Fund* 484,781,406 Fidelity Balanced Fund 117,556,481 Fidelity Magellan Fund 91,863,155 Fidelity Blue Chip Fund 136,586,123 Templeton Foreign I Fund $5,471,176 5,471,176 Fidelity Investment Grade Bond Fund $1,548,125 1,548,125 Fidelity Retirement Money Market Fund $12,186,085 12,186,085 Loans receivable from participants $166,395,767 166,395,767 ---------- ---------- ----------- ------------ -------------- Total investments 5,471,176 1,548,125 12,186,085 166,395,767 3,485,057,475 ---------- ---------- ----------- ------------ -------------- Receivables: Employer contribution 4,015,100 4,015,100 Accrued Investment income and other receivables 6,650,704 Cash and cash equivalents 27,491,419 ---------- ---------- ----------- ------------ -------------- Total assets 5,471,176 1,548,125 16,201,185 166,395,767 3,523,214,698 ---------- ---------- ----------- ------------ -------------- Liabilities: Payables for outstanding purchases 6,340,318 Accrued expenses and other payables 2,681,346 ---------- ---------- ----------- ------------ -------------- Total liabilities 9,021,664 ---------- ---------- ----------- ------------ -------------- Net assets available for plan benefits $5,471,176 $1,548,125 $16,201,185 $166,395,767 $3,514,193,034 ========== ========== =========== ============ ============== Percentage of Master Trust that are N/A N/A N/A ^ ^ plan assets of the Raytheon Savings and Investment Plan for Puerto Rico Based Employees *Represents more than 5% of net assets available for plan benefits ^Represents less than 1% of plan assets under the Master Trust N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund, and Retirement Money Market Fund are not available for the Raytheon Savings and Investment Plan for Puerto Rico Based Employees.
14 J. Master Trust, continued: The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1996:
Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $339,670,440 Prudential Insurance Company of America* 210,594,065 Metropolitan Life Insurance Company* 350,310,646 At fair value: Fidelity Equity Income Fund* $578,166,630 Raytheon Company Common Stock* $671,136,043 BT Pyramid Equity Index Fund* $307,555,916 Fidelity Balanced Fund $83,265,065 Fidelity Magellan Fund $50,454,961 Fidelity Blue Chip Fund Loans receivable from participants* ------------ ------------ ------------ ------------ ----------- ----------- Total investments 900,575,151 578,166,630 671,136,043 307,555,916 83,265,065 50,454,961 ------------ ------------ ------------ ------------ ----------- ----------- Receivables: Accrued investment income 39,737 13,686 Cash and cash equivalents 14,633,134 10,145,818 3,541,437 ------------ ------------ ------------ ------------ ----------- ----------- Total assets 915,208,285 578,166,630 681,321,598 311,111,039 83,265,065 50,454,961 ------------ ------------ ------------ ------------ ----------- ----------- Liabilities: Payables for outstanding purchases 2,682,835 ------------ ------------ ------------ ------------ ----------- ----------- Total liabilities 2,682,835 ------------ ------------ ------------ ------------ ----------- ----------- Net assets available for plan benefits $915,208,285 $578,166,630 $678,638,763 $311,111,039 $83,265,065 $50,454,961 Percentage of Master Trust that are ^ ^ ^ ^ ^ ^ plan assets of the Raytheon Savings and Investment Plan for Puerto Rico Based Employees *Represents more than 5% of net assets available for plan benefits ^Represents less than 1% of plan assets under the Master Trust 15 Blue Chip Loan Fund Fund Total Assets: Investments: At contract value: Bankers Trust* $339,670,440 Prudential Insurance Company of America* 210,594,065 Metropolitan Life Insurance Company* 350,310,646 At fair value: Fidelity Equity Income Fund* 578,166,630 Raytheon Company Common Stock* 671,136,043 BT Pyramid Equity Index Fund* 307,555,916 Fidelity Balance Fund 83,265,065 Fidelity Magellan Fund 50,454,961 Fidelity Blue Chip Fund $67,866,240 67,866,240 Loans receivable from participants* $144,824,714 144,824,714 ----------- ------------ -------------- Total investments 67,866,240 144,824,714 2,803,844,720 ----------- ------------ -------------- Receivables: Accrued Investment income 53,423 Cash and cash equivalents 28,320,389 ----------- ------------ -------------- Total assets 67,866,240 144,824,714 2,832,218,532 ----------- ------------ -------------- Liabilities: Payables for outstanding purchases 2,682,835 ----------- ------------ -------------- Total liabilities 2,682,835 ----------- ------------ -------------- Net assets available for plan benefits $67,866,240 $144,824,714 $2,829,535,697 =========== ============ ============== Percentage of Master Trust that are ^ ^ ^ plan assets of the Raytheon Savings and Investment Plan for Puerto Rico Based Employees *Represents more than 5% of net assets available for plan benefits ^Represents less than 1% of plan assets under the Master Trust
16 J. Master Trust, continued: The following is a summary of investment income by fund under the Master Trust for the year ended December 31, 1997:
Fixed Raytheon Income Common Stock Balanced Magellan Blue Chip Fund Equity Fund Stock Fund Index Fund Fund Fund Fund Investment income: Net appreciation (depreciation) of assets $ (191,924) $132,974,182 $30,715,963 $109,162,707 $ 6,388,316 $ 9,026,047 $15,474,118 Interest 62,319,073 673,934 312,511 Dividends 42,443,971 11,118,152 13,680,351 5,217,835 6,302,875 ----------- ------------ ----------- ------------ ----------- ----------- ----------- Total investment income/(loss) $62,127,149 $175,418,153 $42,508,049 $109,475,218 $20,068,667 $14,243,882 $21,776,993 =========== ============ =========== ============ =========== =========== =========== 17 Templeton Investment Retirement Foreign I Grade Money Loan Fund Bond Fund Market Fund Fund Total Investment income: Net appreciation (depreciation) of assets $(826,396) $22,581 $302,745,594 Interest $10,848,204 74,153,722 Dividends 549,717 36,337 $266,835 79,616,073 --------- ------- ------- ----------- ------------ Total investment income/(loss) $(276,679) $58,918 $266,835 $10,848,204 $456,515,389 ========= ======= ======== =========== ============
EX-99 10 1 EXHIBIT 99.4a CONSENT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Raytheon Company We consent to the incorporation by reference in the Registration Statement of Raytheon Company on Form S-8 (File No. 333-56117) of our report dated May 29, 1998 on our audits of the financial statements of the Raytheon Savings and Investment Plan for Puerto Rico Based Employees as of December 31, 1997 and 1996 and for the year ended December 31, 1997, which report is included in this annual report on Form 10-K/A. Coopers & Lybrand LLP Boston, Massachusetts June 29, 1998 EX-99 11 1 EXHIBIT 99.5 E-SYSTEMS, INC. EMPLOYEE SAVINGS PLAN FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA WITH REPORT OF INDEPENDENT ACCOUNTANTS for the years ended December 31, 1997 and 1996 Report of Independent Accountants Employee Savings Plan Administrative Committee E-Systems, Inc. Employee Savings Plan: We have audited the accompanying statements of net assets available for benefits of the E-Systems, Inc. Employee Savings Plan (the "Plan") as of December 31, 1997 and 1996, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 1997 and 1996, and the changes in the net assets available for benefits for the years then ended in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental schedules of assets held for investment purposes as of December 31, 1997, and reportable transactions for the year then ended are presented for purposes of complying with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, and are not a required part of the basic financial statements. The supplemental schedules have been subjected to the auditing procedures applied in our audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. Dallas, Texas June 8, 1998 2 E-SYSTEMS, INC. EMPLOYEE SAVINGS PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS December 31, 1997 and 1996 ASSETS 1997 1996 Investments--at fair value: Mutual funds $613,860,560 $471,394,300 Collective investment fund 61,180,556 56,821,945 Raytheon common stock fund 35,787,508 33,545,329 Participant loans 22,992,597 22,858,010 ------------ ------------ Total investments at fair value 733,821,221 584,619,584 ------------ ------------ Receivables: Contributions due from employees 2,135,509 1,293,228 Contribution due from employer 9,520,806 8,599,589 ------------ ------------ 11,656,315 9,892,817 ------------ ------------ Net assets available for benefits $745,477,536 $594,512,401 ============ ============ The accompanying notes are an integral part of the financial statements. 3 E-SYSTEMS, INC. EMPLOYEE SAVINGS PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS for the years ended December 31, 1997 and 1996 1997 1996 Additions: Dividend income $ 54,412,625 $ 27,722,560 Interest income 14,947,020 13,563,141 Employee contributions 44,956,931 38,892,568 Employer contributions 17,568,486 15,587,178 Transfer to/from other qualified plans 21,789,278 8,134,901 Other receipts 537,578 186,148 ------------ ------------ Total additions 154,211,918 104,086,496 ------------ ------------ Deductions: Administrative and other expenses 219,897 197,893 Benefits paid to participants 43,412,766 44,538,255 ------------ ------------ Total deductions 43,632,663 44,736,148 ------------ ------------ Net appreciation of investments 40,385,880 34,607,559 ------------ ------------ Net increase 150,965,135 93,957,907 Net assets available for benefits at beginning of year 594,512,401 500,554,494 ------------ ------------ Net assets available for benefits at end of year $745,477,536 $594,512,401 ============ ============ The accompanying notes are an integral part of the financial statements. 4 E-SYSTEMS, INC. EMPLOYEE SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS 1. General Description: The E-Systems, Inc. Employee Savings Plan (the "Plan"), is a defined contribution plan sponsored by Raytheon E-Systems, Inc. ("E-Systems" or the "Company"), a wholly-owned subsidiary of Raytheon Company, which became effective January 1, 1995. Employees are immediately eligible to participate in the Plan. The Plan provides an individual account for each participant. Amounts disbursed to participants or transfers between funds are based solely upon amounts contributed to each participant's account adjusted to reflect any withdrawals and distributions, investment earnings attributable to such fund balances and appreciation or depreciation of the market value of the fund. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). The following description of the Plan is provided for general information purposes only. A detailed description of the Plan is contained in the Plan document. Employer Contributions The Company matches 50% of the first 3% of employee contributions to the Plan for the Plan year through the 401(k) Tax-Advantaged Capital Accumulation Plan ("T-CAP") Company Matching account. The Plan also provides for Regular Discretionary Contributions ("E-CAP") up to 1-1/2% of the lesser of (1) base rate of pay, or (2) W-2 pay plus elected reductions. To be eligible for this contribution, the participant must be an active employee on December 31. Certain Company subsidiaries may make Optional Employer Contributions. If employed by one of these subsidiaries on December 31, the participant receives an allocation equal to a certain percentage, determined by the Board of Directors, of the lesser of (1) base rate of pay, or (2) W-2 pay plus elected reductions. Employee Contributions Participants in the Plan may contribute up to 18% of their annual base rate of pay on a pre-tax basis. Base rate of pay excludes such items as shift differential, quarterly wage adjustments, commissions, unused sick pay, severance pay, allowances, awards, lump sum payments, and per diem payments. The Internal Revenue Service ("IRS") imposed limitation on employee contributions was $9,500 for 1997 and 1996. Internal Revenue Code ("IRC") Section 415 establishes limitations on employee and employer contributions. Any contributions exceeding these limitations are refunded to the participants in accordance with the Plan document. Vesting Rights Participants are immediately 100% vested in their account balances derived from Company contributions, employee contributions and any amounts rolled over to the Plan from another eligible plan. Plan Trustee The Plan's trustee is Vanguard Fiduciary Trust Company. The trustee holds the funds for the Plan and is responsible for managing the Plan's investment assets, executing all investment transactions and recording approved transactions. 5 Participant Investment Programs Employee contributions are invested by the trustee as directed by participants and can be invested in any combination of the funds listed below. Company matching contributions, and other discretionary contributions, if any, may be invested in a different combination of funds than the pre-tax contributions. If a separate election for the Company contributions is not made by the participant, these contributions are then invested in the same fund or funds selected by the participant for their pre-tax contributions. Participants had the option of investing their contributions in any of the following funds: The Vanguard Retirement Savings Trust: investments seek the highest level of current income consistent with safety and stability of principal by investing primarily in contracts issued by life insurance companies, investment contracts issued by domestic commercial banks or United States branches of foreign banks, and other similar types of fixed-principal investments. The Trust may also hold no more than 15% of its assets in short-term obligations, money market funds, or federally insured deposits. The Vanguard/Morgan Growth Fund: investments consist primarily of common stocks of corporations with either established growth patterns, emerging growth potential, or cyclical growth patterns. The Vanguard/Windsor Fund: investments consist of a portfolio of common stocks, the objective of which is primarily long-term growth and secondly, current income through dividends. The Vanguard Money Market Reserves Prime Portfolio: investments consist of high-quality money market instruments that mature in one year or less. The Vanguard Short-Term Corporate Bond Portfolio: investments consist of investment grade bonds with maturities from less than one to four years, including United States Treasury and agency obligations, the objective of which is primarily to conserve principal and secondly, to maximize current income. The Vanguard Index Trust 500 Portfolio: investments consist of a portfolio of stocks designed to match the performance of Standard & Poor's 500 Corporate Stock Price Index. The Vanguard/Wellesley Income Fund: investments consist of about 60% in fixed-income securities and 40% in common stocks. The Fund objective is primarily current income through dividends, and secondly, moderate capital growth. The Vanguard International Value Portfolio: investments seek maximum long-term total return consistent with reasonable risk by investing in a diversified group of large and medium-sized companies based outside of the United States. Total return includes both income and capital appreciation. 6 The Raytheon Common Stock Fund: investments consist of Raytheon Class B common stock. However, contributions may be invested in the Vanguard Money Market Reserves Prime Portfolio until a stock purchase is made. Loan Provisions Participants may obtain loans from their account balances in any of the Vanguard Funds and/or the Raytheon Common Stock Fund. Loans bear interest at the prime rate, as published in the Wall Street Journal on the last day of each calendar quarter, plus one percentage point. Such interest rate is effective for all loans during the subsequent quarter. All loans become part of the Loan Fund. Interest charged on loans is credited to the participant's account and is included in interest income on the statement of changes in net assets available for benefits. The maximum a participant can borrow is 50% of his/her account balance up to a limit of $50,000. While a participant may borrow up to 50% of their E-Systems, Inc. Employee Savings Plan account balance, loans cannot be funded from the E-CAP, Company Matching or Optional Employer accounts. However, if the participant had a loan outstanding within the previous 12 months, IRS rules require that the $50,000 limit be reduced by their highest outstanding loan balance during the 12 months before the current loan request. Transfer Provisions Participants are permitted to make unlimited transfers among investment options, with the exception of transfers out of the Vanguard Investment Contract Trust ("VICT"). The funds transferred out of the VICT may be transferred into one of the equity funds at any time, but must remain in these equity funds for a period of 90 days. After the 90-day period, the funds may be transferred out of the equity funds and into either the Vanguard Money Market Reserves Prime Portfolio or the Vanguard Short-Term Corporate Bond Portfolio. Participants may only transfer funds from the VICT into fixed income options once a year, during January. Fixed income options include the Vanguard Money Market Reserves Prime Portfolio and the Vanguard Short-Term Corporate Bond Portfolio. Participants may transfer up to $500 or 25% of their balance in the VICT, whichever is higher, into the fixed income options. Income Allocations Each investment fund's gain or losses are determined and allocated by its fund manager every business day. Withdrawals All distributions except distributions of the Raytheon Common Stock Fund are made in cash. Participants are eligible for distributions upon termination, retirement, disability, or hardship (as determined by the IRS). Distributions may be made to the participant or beneficiary as a lump sum payment or as an insured annuity. No in-service withdrawals of the company matching, discretionary, or optional employer contributions are allowed. 7 Plan Termination Although the Company has not expressed any intention to do so, it has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of a termination of the Plan, all plan assets would be distributed in accordance with the Plan. 2. Summary of Significant Accounting Policies: The financial statements have been prepared on the accrual basis of accounting. Use of Estimates The preparation of the Plan's financial statements in conformity with generally accepted accounting principles requires the plan administrator to make significant estimates and assumptions that affect the reported amounts of net assets available for benefits at the date of the financial statements and the changes in net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. Risks and Uncertainties The Plan provides for various investment options in any combination of stocks, bonds, fixed income securities, mutual funds, and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants' account balances and the amounts reported in the statement of net assets available for plan benefits. Investments The valuation of the Plan's investments in all funds is based on the market value of the assets held in the funds. The Plan's relative interest in the funds is determined on a unit-method basis. The valuation of the Vanguard Funds is based on the closing market price of the assets which comprise the funds on the last business day of the Plan year. Investments in the Vanguard Retirement Savings Trust are carried at market value (which equals original cost plus accrued interest less any distribution). Market value approximates contract value. The valuation of Class B common stock in the Raytheon Common Stock Fund is based on closing market price as reported on the New York Stock Exchange on the last business day of the Plan year. Purchases and sales of securities are reflected on the trade-date basis. Dividend income is recognized on the ex-dividend date. The Plan presents in the statement of changes in net assets the net appreciation (depreciation) in the fair value of its investments which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. Administrative Expenses The expenses incurred by the Plan are paid from Plan funds. Expenses incurred in administering the Plan are generally allocated to the respective fund to which they relate. 8 3. Plan Amendments: The Plan was amended effective January 1, 1997, to include employees of Engineering Research Associates, Inc. Retirement Savings Plan ("ERA") and authorized the transfer of ERA employees' accounts into the Plan. This amendment also changed the distribution policy related to prior plan employer contribution accounts from the ERA Plan. 4. Investments: The Plan held the following investments at December 31, 1997 and 1996 (investments that represent 5% or more of the Plan's net assets are separately identified): Fair Value at December 31, 1997 1996 Raytheon Common Stock Fund $ 35,787,508 $ 33,545,329 Vanguard/Morgan Growth Fund 97,914,498 68,074,242 Vanguard/ Windsor Fund 226,774,736 173,891,032 Vanguard Money Market Reserves Prime Portfolio 91,047,417 95,347,229 Vanguard Short-Term Corporate Bond Portfolio 16,848,440 14,234,216 Vanguard Index Trust 500 Portfolio 134,265,332 84,493,315 Vanguard International Value Portfolio 14,883,787 13,172,565 Vanguard/Wellesley Income Fund 32,126,350 22,181,701 ------------ ------------ 649,648,068 504,939,629 Vanguard Retirement Savings Trust 61,180,556 56,821,945 Participant loans 22,992,597 22,858,010 ------------ ------------ $733,821,221 $584,619,584 ============ ============ 5. Income Tax Status: The IRS has determined and informed the Company by a letter dated December 4, 1996 that the Plan is designed in accordance with applicable sections of the IRC. The Plan has been amended since the date the IRS made its tax determination; however, the Plan administrator believes the Plan is designed and currently being operated in compliance with the applicable requirements of the IRC. 9 6. Combining Statements of Net Assets Available for Benefits and Changes in Net Assets Available for Benefits: Net assets available for benefits at December 31, 1997 are as follows:
Raytheon Vanguard Vanguard/ Common Retirement Morgan Vanguard/ Vanguard Money Stock Savings Growth Windsor Market Reserves Total Fund Trust Fund Fund Prime Portfolio Assets: Investments at fair value: Mutual funds $613,860,560 $ -- $ -- $ 97,914,498 $226,774,736 $ 91,047,417 Collective investment fund 61,180,556 -- 61,180,556 -- -- -- Raytheon Company stock fund 35,787,508 35,787,508 -- -- -- -- Participant loans 22,992,597 -- -- -- -- -- ------------ ------------ ------------ ------------ ------------ ------------ Total investments 733,821,221 35,787,508 61,180,556 97,914,498 226,774,736 91,047,417 ------------ ------------ ------------ ------------ ------------ ------------ Receivables: Contributions due from employees 2,135,509 141,251 161,840 301,542 629,130 219,638 Contributions due from employer 9,520,806 1,597,516 225,700 905,920 1,566,103 2,542,782 ------------ ------------ ------------ ------------ ------------ ------------ Total receivables 11,656,315 1,738,767 387,540 1,207,462 2,195,233 2,762,420 Net assets available for benefits $745,477,536 $ 37,526,275 $ 61,568,096 $ 99,121,960 $228,969,969 $ 93,809,837 ============ ============ ============ ============ ============ ============ 10 Vanguard Vanguard/ Vanguard Vanguard Short Index Wellesley International Term Corporate Trust 500 Income Value Bond Portfolio Portfolio Fund Portfolio Loan Fund Assets: Investments at fair value: Mutual funds $ 16,848,440 $134,265,332 $ 32,126,350 $ 14,883,787 $ -- Collective investment fund -- -- -- -- -- Raytheon Company stock fund -- -- -- -- -- Participant loans -- -- -- -- 22,992,597 ------------ ------------ ------------ ------------ ------------ Total investments 16,848,440 134,265,332 32,126,350 14,883,787 22,992,597 ------------ ------------ ------------ ------------ ------------ Contributions due from employees 61,411 434,798 109,353 76,546 -- Contributions due from employer 142,667 1,732,435 462,314 345,369 -- ------------ ------------ ------------ ------------ ------------ Total receivables 204,078 2,167,233 571,667 421,915 -- Net assets available for benefits $ 17,052,518 $136,432,565 $ 32,698,017 $ 15,305,702 $ 22,992,597 ============ ============ ============ ============ ============
11 Net assets available for benefits at December 31, 1996 are as follows:
Raytheon Vanguard Vanguard/ Common Retirement Morgan Vanguard/ Vanguard Money Stock Savings Growth Windsor Market Reserves Total Fund Trust Fund Fund Prime Portfolio Assets: Investments at fair value: Mutual funds $471,394,300 -- -- $ 68,074,242 $173,891,032 $ 95,347,229 Collective investment fund 56,821,945 -- $ 56,821,945 -- -- -- Raytheon Company stock fund 33,545,329 $ 33,545,329 -- -- -- -- Participant loans 22,858,010 -- -- -- -- -- ------------ ------------ ------------ ------------ ------------ ------------ Total investments 584,619,584 33,545,329 56,821,945 68,074,242 173,891,032 95,347,229 ------------ ------------ ------------ ------------ ------------ ------------ Receivables: Contributions due from employees 1,293,228 77,803 105,266 174,491 376,700 146,384 Contributions due from employer 8,599,589 1,706,924 209,032 774,618 1,375,791 2,168,315 ------------ ------------ ------------ ------------ ------------ ------------ Total receivables 9,892,817 1,784,727 314,298 949,109 1,752,491 2,314,699 ------------ ------------ ------------ ------------ ------------ ------------ Net assets available for benefits $594,512,401 $ 35,330,056 $ 57,136,243 $ 69,023,351 $175,643,523 $ 97,661,928 ============ ============ ============ ============ ============ ============ 12 Vanguard Vanguard/ Vanguard Vanguard Short- Index Wellesley International Term Corporate Trust 500 Income Value Bond Portfolio Portfolio Fund Portfolio Loan Fund Investments at fair value: Mutual funds $ 14,234,216 $ 84,493,315 $ 22,181,701 $ 13,172,565 -- Collective investment fund -- -- -- -- -- Raytheon Company stock fund -- -- -- -- -- Participant loans -- -- -- -- $ 22,858,010 ------------ ------------ ------------ ------------ ------------ Total investments 14,234,216 84,493,315 22,181,701 13,172,565 22,858,010 ------------ ------------ ------------ ------------ ------------ Receivables: Contributions due from employees 43,654 250,338 66,282 52,310 -- Contributions due from employer 135,064 1,484,826 398,529 346,490 -- ------------ ------------ ------------ ------------ ------------ Total receivables 178,718 1,735,164 464,811 398,800 -- ------------ ------------ ------------ ------------ ------------ Net assets available for benefits $ 14,412,934 $ 86,228,479 $ 22,646,512 $ 13,571,365 $ 22,858,010 ============ ============ ============ ============ ============
13 6. Combining Statements of Net Assets Available for Benefits and Changes in Net Assets Available for Benefits, continued: Changes in net assets available for benefits for the year ended December 31, 1997 are as follows:
Vanguard Raytheon Vanguard Vanguard/ Vanguard/ Money Market Common Retirement Morgan Windsor Reserves Prime Total Stock Fund Savings Trust Growth Fund Fund Portfolio Net assets available for benefits, January 1, 1997 $594,512,401 $ 35,330,056 $ 57,136,243 $ 69,023,351 $175,643,523 $ 97,661,928 ------------ ------------ ------------ ------------ ------------ ------------ Additions: Dividend income 54,412,625 634,222 -- 12,998,262 36,042,403 -- Interest income 14,947,020 -- 3,586,959 -- -- 4,912,252 Employee contributions 44,956,931 2,984,412 3,263,374 6,468,575 13,428,028 3,676,361 Employer contributions 17,568,486 2,164,068 866,470 2,037,203 3,929,947 3,313,724 Transfer to/from other qualified plans 21,789,278 821,753 1,228,041 3,536,507 4,526,759 1,470,742 Other receipts (disbursements) 537,578 13,884 21,468 30,872 70,085 339,066 ------------ ------------ ------------ ------------ ------------ ------------ Total additions 154,211,918 6,618,339 8,966,312 25,071,419 57,997,222 13,712,145 ------------ ------------ ------------ ------------ ------------ ------------ Deductions: Administrative and other expenses 219,897 22,085 6,223 25,145 49,143 55,156 Benefits paid to participants 43,412,766 841,545 5,830,500 4,023,261 11,284,786 9,387,950 ------------ ------------ ------------ ------------ ------------ ------------ Total deductions 43,632,663 863,630 5,836,723 4,048,406 11,333,929 9,443,106 ------------ ------------ ------------ ------------ ------------ ------------ Transfers -- (5,655,890) 1,302,264 452,337 3,417,959 (8,121,130) ------------ ------------ ------------ ------------ ------------ ------------ Net appreciation (depreciation) of investments 40,385,880 2,097,400 -- 8,623,259 3,245,194 -- ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) 150,965,135 2,196,219 4,431,853 30,098,609 53,326,446 (3,852,091) ------------ ------------ ------------ ------------ ------------ ------------ Net assets available for benefits, December 31, 1997 $745,477,536 $ 37,526,275 $ 61,568,096 $ 99,121,960 $228,969,969 $ 93,809,837 ============ ============ ============ ============ ============ ============ 14 Vanguard Vanguard Vanguard/ Vanguard Short-Term Index Wellesley International Corporate Trust 500 Income Value Bond Portfolio Portfolio Fund Portfolio Loan Fund Net assets available for benefits, January 1, 1997 $14,412,934 $ 86,228,479 $22,646,512 $ 13,571,365 $ 22,858,010 Additions: Dividend income -- 2,692,576 -- 2,045,162 -- Interest income 930,317 -- 3,382,496 -- 2,134,996 Employee contributions 1,341,287 9,532,053 2,400,639 1,862,202 -- Employer contributions 389,632 3,316,226 898,198 653,018 -- Transfer to/from other qualified plans 1,009,628 5,378,213 2,503,615 1,151,048 162,972 Other receipts (disbursements) 7,834 39,628 7,329 8,805 (1,393) ----------- ------------ ----------- ------------ ------------ Total additions 3,678,698 20,958,696 9,192,277 5,720,235 2,296,575 ----------- ------------ ----------- ------------ ------------ Administrative and other expenses 4,990 39,711 11,053 6,391 -- Benefits paid to participants 1,297,902 7,042,765 1,487,423 883,988 1,332,646 ----------- ------------ ----------- ------------ ------------ Total deductions 1,302,892 7,082,476 1,498,476 890,379 1,332,646 ----------- ------------ ----------- ------------ ------------ Transfers 174,787 8,625,867 851,109 (217,961) (829,342) ----------- ------------ ----------- ------------ ------------ Net appreciation (depreciation) of investments 88,991 27,701,999 1,506,595 (2,877,558) -- ----------- ------------ ----------- ------------ ------------ Net increase (decrease) 2,639,584 50,204,086 10,051,505 1,734,337 134,587 ----------- ------------ ----------- ------------ ------------ Net assets available for benefits, December 31, 1997 $17,052,518 $136,432,565 $32,698,017 $ 15,305,702 $ 22,992,597 =========== ============ =========== ============ ============
15 6. Combining Statements of Net Assets Available for Benefits and Changes in Net Assets Available for Benefits, continued: Changes in net assets available for benefits for the year ended December 31, 1996 are as follows:
Vanguard Vanguard/ Vanguard Raytheon Retirement Morgan Vanguard/ Money Market Common Savings Growth Windsor Reserves Prime Total Stock Fund Trust Fund Fund Portfolio Net assets available for benefits, January 1, 1996 $500,554,494 $ 13,185,095 $ 53,401,234 $42,342,785 $124,660,848 $ 169,074,878 ------------ ------------ ------------ ----------- ------------ ------------- Additions: Dividend income 27,722,560 316,591 -- 6,461,821 16,617,514 -- Interest income 13,563,141 -- 3,225,136 -- -- 5,662,728 Employee contributions 38,892,568 1,951,850 3,596,336 5,180,985 12,436,860 3,523,422 Employer contributions 15,587,178 2,065,612 897,534 1,695,947 3,579,619 2,893,317 qualified plans 8,134,901 423,601 281,483 1,418,757 1,572,737 489,658 Other receipts (disbursements) 186,148 23,319 (5,798) 30,898 132,948 (40,319) ------------ ------------ ------------ ----------- ------------ ------------- Total additions 104,086,496 4,780,973 7,994,691 14,788,408 34,339,678 12,528,806 ------------ ------------ ------------ ----------- ------------ ------------- Deductions: Administrative and other expenses 197,893 19,018 8,396 21,363 49,281 51,805 Benefits paid to participants 44,538,255 606,895 5,501,619 3,024,269 8,065,342 19,039,033 ------------ ------------ ------------ ----------- ------------ ------------- Total deductions 44,736,148 625,913 5,510,015 3,045,632 8,114,623 19,090,838 ------------ ------------ ------------ ----------- ------------ ------------- Transfers -- 18,341,916 1,250,333 9,620,443 5,961,265 (64,850,918) ------------ ------------ ------------ ----------- ------------ ------------- Net appreciation (depreciation) of investments 34,607,559 (352,015) -- 5,317,347 18,796,355 -- ------------ ------------ ------------ ----------- ------------ ------------- Net increase (decrease) 93,957,907 22,144,961 3,735,009 26,680,566 50,982,675 (71,412,950) ------------ ----------- ------------ ----------- ------------ ------------- Net assets available for benefits, December 31, 1996 $594,512,401 $ 35,330,056 $ 57,136,243 $69,023,351 $175,643,523 $ 97,661,928 ============ ============ ============ =========== ============ ============= 16 Vanguard Vanguard Vanguard/ Vanguard Short-Term Index Wellesley International Corporate Trust 500 Income Value Bond Portfolio Portfolio Fund Portfolio Loan Fund Net assets available for benefits, January 1, 1996 $ 11,603,894 $ 44,579,839 $ 14,201,003 $ 6,644,206 $ 20,860,712 ------------ ------------ ------------ ------------ ------------ Additions: Dividend income -- 1,777,001 -- 2,549,633 -- Interest income 830,718 -- 1,785,544 -- 2,059,015 Employee contributions 1,375,434 7,078,147 2,141,832 1,607,702 -- Employer contributions 385,883 2,676,588 784,604 608,074 -- Transfer from other qualified plans 440,632 2,512,291 713,862 263,937 17,943 Other receipts (disbursements) 4,695 30,859 5,294 4,295 (43) ------------ ------------ ------------ ------------ ------------ Total additions 3,037,362 14,074,886 5,431,136 5,033,641 2,076,915 ------------ ------------ ------------ ------------ ------------ Deductions: Administrative and other expenses 5,375 28,472 9,190 4,993 -- Benefits paid to participants 796,455 4,662,453 1,276,504 545,346 1,020,339 ------------ ------------ ------------ ------------ ------------ Total deductions 801,830 4,690,925 1,285,694 550,339 1,020,339 ------------ ------------ ------------ ------------ ------------ Transfers 772,960 19,806,330 4,199,218 3,957,731 940,722 ------------ ------------ ------------ ------------ ------------ Net appreciation (depreciation) of investments (199,452) 12,458,349 100,849 (1,513,874) -- ------------ ------------ ------------ ------------ ------------ Net increase (decrease) 2,809,040 41,648,640 8,445,509 6,927,159 1,997,298 ------------ ------------ ------------ ------------ ------------ Net assets available for benefits, December 31, 1996 $ 14,412,934 $ 86,228,479 $ 22,646,512 $ 13,571,365 $ 22,858,010 ============ ============ ============ ============ ============
17
E-SYSTEMS, INC. EMPLOYEE SAVINGS PLAN Item 27aSCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES December 31, 1997 Name of Issuer and Title of Issue Interest Rate Shares Cost Market Vanguard Retirement Savings Trust 61,180,556 $ 61,180,556 $ 61,180,556 Vanguard/Morgan Growth Fund 5,582,355 83,538,031 97,914,498 Vanguard/Windsor Fund 13,355,403 208,193,444 226,774,736 Vanguard Money Market Reserves Prime Portfolio 91,047,417 91,047,417 91,047,417 Vanguard Short-Term Corporate Bond Portfolio 1,558,598 16,761,967 16,848,440 Vanguard Index Trust 500 Portfolio 1,490,678 95,498,167 134,265,332 Vanguard/Wellesley Income Fund 1,469,641 30,172,824 32,126,350 Raytheon Common Stock Fund 2,822,359 34,761,821 35,787,508 Vanguard International Value Portfolio 657,411 19,180,678 14,883,787 ------------ ------------ Total investments $640,334,905 $710,828,624 ============ ============ Participant loans 6.97% -13.28% $ -- 22,992,597 ============ ============ Raytheon Company and Vanguard investments denote parties-in-interest.
18
E-SYSTEMS, INC. EMPLOYEE SAVINGS PLAN Item 27dSCHEDULE OF REPORTABLE TRANSACTIONS for the year ended December 31, 1997 Number of Cost of Number Cost Proceeds Gain (Loss) Identity of Issue Purchases Purchases of Sales of Asset From Sales on Sales Category (iii) - Series of securities transactions Vanguard/Windsor Fund 252 $84,330,904 253 $29,386,487 $34,762,479 $5,375,992 Vanguard/Morgan Growth Fund 248 $39,170,358 252 $15,960,298 $17,984,232 $2,023,934 Raytheon Common Stock Fund 238 $33,046,678 251 $31,760,123 $32,915,784 $1,155,661 Vanguard Money Market Reserves Prime Portfolio 256 $60,738,093 253 $65,376,972 $65,376,972 $ - Vanguard Index Trust 500 Portfolio 253 $57,221,134 253 $30,455,013 $35,190,744 $4,735,731 Vanguard Retirement Savings Trust 247 $22,195,710 250 $17,858,566 $17,858,566 $ - There were no category (i), (ii) or (iv) reportable transactions during 1997. Raytheon Company and Vanguard investments denote parties-in-interest.
EX-99 12 1 EXHIBIT 99.5a CONSENT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Raytheon Company We consent to the incorporation by reference in the Registration Statement of Raytheon Company on Form S-8 (File No. 333-56117) of our report dated May 29, 1998 on our audits of the financial statements of the E-Systems, Inc. Employee Savings Plan as of December 31, 1997 and 1996 and for the year ended December 31, 1997, which report is included in this annual report on Form 10-K/A. Coopers & Lybrand LLP Boston, Massachusetts June 29, 1998 EX-99 13 1 EXHIBIT 99.6 RAYTHEON TI SYSTEMS SAVINGS PLAN FINANCIAL STATEMENTS TO ACCOMPANY 1997 FORM 5500 ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN UNDER ERISA OF 1974 FOR THE PERIOD FROM JULY 11, 1997 to DECEMBER 31, 1997 The supplemental schedules required to accompany the Plan's Form 5500 are not required since the Plan's assets are held in a Master Trust. Accordingly, detailed financial information, including the supplemental schedules, must be filed separately with the Department of Labor by the plan administrator. REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Raytheon Company: We have audited the accompanying statement of net assets available for plan benefits of the Raytheon TI Systems Savings Plan (the "Plan") as of December 31, 1997, and the related statement of changes in net assets available for plan benefits for the period from July 11, 1997 to December 31, 1997. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Plan as of December 31, 1997 and the changes in net assets available for plan benefits for the period from July 11, 1997 to December 31, 1997 in conformity with generally accepted accounting principles. Coopers & Lybrand LLP Boston, Massachusetts May 29, 1998 2 RAYTHEON TI SYSTEMS SAVINGS PLAN STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS as of December 31, 1997 Assets: Master trust Investments: At contract value (Notes B, E and H) $ 27,129,250 At fair value (Notes B, F and H) 151,647,372 ------------ 178,776,622 ------------ Receivables Accrued investment income and other receivables 528,072 Cash and cash equivalents 1,673,631 ------------ Total assets 180,978,325 ------------ Liabilities: Payable for outstanding purchases 533,996 Accrued expenses and other payables 192,678 ------------ Total liabilities 726,674 ------------ Net assets available for plan benefits $180,251,651 ============ The accompanying notes are an integral part of the financial statements. 3 RAYTHEON TI SYSTEMS SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS for the period from July 11, 1997 to December 31, 1997 Additions to net assets attributable to: Investment income (Notes B, E, and H): Net depreciation of investments $ (4,990,657) Interest 1,304,618 Dividends 3,548,891 ------------- (137,148) ------------- Contributions and deferrals: Employee deferrals 29,221,374 Employer contributions 4,151,771 Transfers (Note G) 149,409,371 ------------- 182,782,516 ------------- Total additions 182,645,368 ------------- Deductions from net assets attributable to: Distributions to participants 2,367,783 Administrative expenses 14,904 Transfers (Note G) 11,030 ------------- Total deductions 2,393,717 ------------- Increase in net assets 180,251,651 Net assets available for plan benefits, beginning of year -- ------------- Net assets available for plan benefits, end of year $ 180,251,651 ============= The accompanying notes are an integral part of the financial statements. 4 A. Description of Plan: General The following description of the Raytheon TI Systems Savings Plan (the "Plan") provides only general information. Participants should refer to the plan document for a complete description of the Plan's provisions. The Plan, which was established on July 11, 1997, is a defined contribution plan covering certain employees of Raytheon Company (the "Company"). Effective July 11, 1997, employees assumed in the acquisition of the Texas Instruments defense business and that participated in the Texas Instruments Defense Savings Plan, became eligible to participate in the Plan. Participants have the option to rollover amounts accumulated in plans sponsored by Texas Instruments to the Plan. Upon election, amounts will be rolled over into funds selected by the participant. An employee becomes eligible to participate in the Plan on the date he or she becomes an employee and may enter the Plan any day thereafter during his or her employment. The purpose of the Plan is to provide participants with a tax-effective means of meeting both short- and long-term investment objectives. The Plan is intended to be a "qualified cash or deferred arrangement" under Sections 401(a) and 401(k) of the Internal Revenue Code (the "Code"). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan's investments are held in the Raytheon Company Master Trust for Defined Contribution Plans ("Master Trust") with the assets of other defined contribution plans of Raytheon Company and subsidiaries. The trustee of the Master Trust maintains a separate account reflecting the equitable share in the Trust of each plan. Investment income and administrative expenses relating to the Master Trust are allocated to the individual plans based upon average monthly balances invested by each plan. Contributions and Deferrals Eligible employees are allowed to defer to the Plan up to 17% of their salaries. The Company contributes amounts equal to 50% of each participant's deferral, up to a maximum of 2% of the participant's salary. As of December 31, 1997, the annual employee deferral for a participant cannot exceed $7,000. Rollover contributions from other qualified plans are accepted by the Plan. Participants may invest their deferrals in any combination of nine funds: (a) a Fixed Income Fund under which assets are invested primarily in contracts providing for fixed rates of interest for specified periods of time, (b) an Equity Fund which invests in shares of a mutual fund which consists primarily of income-producing equity securities, (c) a Raytheon Common Stock Fund which invests in shares of Raytheon Company Class B common stock, (d) a Stock Index Fund which invests in a commingled pool consisting primarily of equity securities and is designed to track the S&P 500 Index, (e a Balanced Fund which invests in shares of a mutual fund which consists primarily of equity securities, bonds and money market instruments, (f) the Magellan Fund, a growth fund which invests primarily in equities of companies of all types and sizes, (g) the Blue Chip Fund, a growth fund which invests primarily in equities of well known and established companies, (h) the Templeton Foreign I Fund, a long-term capital growth fund which invests in stocks and debt obligations of companies and governments of any nation and (i) the Investment Grade Bond Fund which invests primarily in U.S. government and corporate bonds including, without limitation, index funds and mutual funds. Dividends and distributions from investments of the Equity Fund, the Raytheon Common Stock Fund, the Stock Index Fund, the Balanced Fund, the Magellan Fund, the Blue Chip Fund, the Templeton Foreign I Fund and the Investment Grade Bond Fund are reinvested in their respective funds; stock dividends, stock splits and similar changes are also reflected in the funds. 5 Participant Accounts Each participant's account is credited with the participant's deferral, the Company's contribution and an allocation of plan earnings. Plan earnings are allocated based on account balances by fund. Vesting Participants are immediately vested in their voluntary deferrals plus actual earnings thereon. Vesting requirements for employer contributions plus earnings thereon may vary depending upon when an employee became eligible to participate in the Plan. Vesting generally occurs upon the earliest of the completion of five years of service or three years of plan participation or upon retirement, death, disability, or attainment of normal retirement age. Forfeitures of the nonvested portions of terminated participants' accounts are used to reduce required contributions of the Company. Distributions to Participants A participant may withdraw all or a portion of deferrals, employer contributions and related earnings upon attainment of age 59-1/2. For reasons of financial hardship, as defined in the Plan document, a participant may withdraw all or a portion of deferrals. On termination of employment, a participant will receive a lump-sum distribution unless the vested account is valued in excess of $3,500 and the participant elects to defer distribution. A retiree or a beneficiary of a deceased participant may defer the distribution until January of the year following attainment of age 65. Loans to Participants A participant may borrow against a portion of the balance in the participant's account, subject to certain restrictions. The maximum amount of a loan is the lesser of one-half of the participant's vested account balance or $50,000. The minimum loan which may be granted is $500. The interest rate applied is equal to the prime rate published in the Wall Street Journal on the first business day in June and December of each year. Loans must be repaid over a period of up to five years by means of payroll deductions. In certain cases, the repayment period may be extended up to 15 years. Interest paid to the Plan on loans to participants is credited to the borrower's account in the investment fund to which repayments are made. Administrative Expenses Substantially all expenses of administering the Plan are paid by the plan participants. B. Summary of Significant Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting. 6 The Plan's investment contracts are fully benefit-responsive and are therefore included in the financial statements at their contract value, defined as net contributions and deferrals plus interest earned on the underlying investments at contracted rates. Because the investment contracts are fully benefit-responsive, contract values approximate fair value. Investments in mutual funds and the commingled pool are valued at the closing net asset value reported on the last business day of the year. Investments in securities (common stocks) traded on a national securities exchange are valued at the last reported sales price on the last business day of the year. Cash equivalents are short-term money market instruments and are valued at cost which approximates fair value. Security transactions are recorded on trade date. Except for its investment contracts (Note E), the Plan's investments are held by bank-administered trust funds. Payables for outstanding security transactions represent trades which have occurred but have not yet settled. The Plan presents in the statement of changes in net assets the net appreciation (depreciation) in the fair value of its investments which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. Dividend income is recorded on the ex-dividend date. Income from other investments is recorded as earned on an accrual basis. Benefits are recorded when paid. The preparation of the financial statements in conformity with generally accepted accounting principles requires the plan administrator to make significant estimates and assumptions that affect the reported amounts of net assets and liabilities available for benefits at the date of the financial statements and the changes in net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from the estimates included in the financial statements. The Plan provides for various investment options in any combination of stocks, bonds, fixed income securities, mutual funds and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the statement of net assets available for plan benefits and the statement of changes in net assets available for plan benefits. C. Federal Income Tax Status: Given that the Plan was established effective July 11, 1997, the Plan has not received a tax determination letter to date. Raytheon Company has submitted an application with the Internal Revenue Service under the 401(b) regulation of the Internal Revenue Code and expects to receive the determination letter by December 31, 1998. The plan administrator and the Plan's legal counsel believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, no provision for income taxes has been included in the Plan's financial statements. 7 D. Plan Termination: Although it has not expressed any intention to do so, the Company reserves the right under the Plan at any time or times to discontinue its contributions and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, plan assets shall be distributed among all participants in proportion to their interest and employee contributions shall be distributed in accordance with the provisions contained in section 401(k)(10) of the Internal Revenue Code. E. Investment Contracts: The Plan invests in collateralized fixed income investment portfolios (with no expiration date), three of which are managed by insurance companies and one of which is managed by an investment management firm. The credited interest rates are adjusted semiannually to reflect the experienced and anticipated yields to be earned on such investments, based on their book value. The annualized average yield and credited interest rates were as follows: Annualized Credited Average Yield Interest Rate For the year ended December 31, 1997: Bankers Trust (WBS 92-485) 6.95% 6.95% Metropolitan Life Insurance Company (GIC GA-12908) 6.86% 6.86% Metropolitan Life Insurance Company (GIC GA-13659) 6.43% 6.43% Prudential Asset Management Company (GIC 917163-001) 6.99% 6.99% The contract values are subject to limitations in certain situations including large workforce reductions and plan termination. In the financial statements, the two Metropolitan Life Insurance Company contracts are recorded as one investment option. F. Related Party Transactions: In accordance with the provisions of the Plan, Fidelity Management Trust Company (the "Trustee") acts as the Plan's agent for purchases and sales of shares of Raytheon Company Class B common stock. These transactions are performed on the Master Trust level. For the Master Trust, purchases amounted to $200,689,057 and sales amounted to $102,165,608 for the year ended December 31, 1997. G. Transfers: Transfers include transfers of participant accounts, individually and/or in groups, between the Raytheon TI Systems Savings Plan and other plans included in the Raytheon Company Master Trust for those participants, and/or groups of participants, who changed plans during the year. Transfers also include transfers of participant accounts, individually and/or in groups, between the Raytheon TI Systems Savings Plan and similar savings plans of other companies for those participants who changed companies during the year. During the Plan year, the participants in the Texas Instruments Defense Savings Plan voluntarily elected to transfer approximately $149 million into the Plan. As of December 31, 1997, there are remaining participants that have the option to make a rollover election in a future period. 8 H. Fund Data: The following is a summary of net assets available for plan benefits by fund as of December 31, 1997:
Raytheon Fixed Equity Common Stock Balanced Magellan Income Fund Fund Stock Fund Index Fund Fund Fund Assets: Master trust investments: At contract value: Bankers Trust* $10,132,377 Prudential Insurance Company of America 6,284,670 Metropolitan Life Insurance Company* 10,712,203 At fair value: Fidelity Equity Income Fund $8,254,100 Raytheon Company Common Stock* $ 62,818,459 BT Pyramid Equity Index Fund* $27,442,258 Fidelity Balanced Fund $7,638,642 Fidelity Magellan Fund $6,635,153 Fidelity Blue Chip Fund* Templeton Foreign I Fund Fidelity Investment Grade Bond Fund Loans receivable from participants* ----------- ---------- ----------- ----------- ---------- ---------- Total investments 27,129,250 8,254,100 62,818,459 27,442,258 7,638,642 6,635,153 ----------- ---------- ----------- ----------- ---------- ---------- Receivables: Accrued investment income and other receivables 462,345 65,727 Cash and cash equivalents 267,275 1,136,836 269,520 ----------- ---------- ----------- ----------- ---------- ---------- Total assets 27,396,525 8,254,100 64,417,640 27,777,505 7,638,642 6,635,153 ----------- ---------- ----------- ----------- ---------- ---------- Liabilities: Payable for outstanding purchases 533,996 Accrued expenses and other payables 124,723 67,955 ----------- ---------- ----------- ----------- ---------- ---------- Total liabilities 658,719 67,955 ----------- ---------- ----------- ----------- ---------- ---------- Net assets available for plan benefits $27,396,525 $8,254,100 $63,758,921 $27,709,550 $7,638,642 $6,635,153 =========== ========== =========== =========== ========== ========== *Represents more than 5% of net assets available for plan benefits 9 Templeton Investment Blue Chip Foreign I Grade Fund Fund Bond Fund Loan Fund Total Assets: Master trust investments: At contract value: Bankers Trust* $ 10,132,377 Prudential Insurance Company of America 6,284,670 Metropolitan Life Insurance Company* 10,712,203 At fair value: Fidelity Equity Income Fund 8,254,100 Raytheon Company Common Stock* 62,818,459 BT Pyramid Equity Index Fund* 27,442,258 Fidelity Balanced Fund 7,638,642 Fidelity Magellan Fund 6,635,153 Fidelity Blue Chip Fund* $18,760,639 18,760,639 Templeton Foreign I Fund $5,471,176 5,471,176 Fidelity Investment Grade Bond Fund $1,548,125 1,548,125 Loans receivable from participants* $13,078,820 13,078,820 ----------- ---------- ---------- ----------- ------------ Total investments 18,760,639 5,471,176 1,548,125 13,078,820 178,776,622 ----------- ---------- ---------- ----------- ------------ Receivables: Accrued investment income and other receivables 528,072 Cash and cash equivalents 1,673,631 ----------- ---------- ---------- ----------- ------------ Total assets 18,760,639 5,471,176 1,548,125 13,078,820 180,978,325 ----------- ---------- ---------- ----------- ------------ Liabilities: Payable for outstanding purchases 533,996 Accrued expenses and other payables 192,678 ----------- ---------- ---------- ----------- ------------ Total liabilities 726,674 ----------- ---------- ---------- ----------- ------------ Net assets available for plan benefits $18,760,639 $5,471,176 $1,548,125 $13,078,820 $180,251,651 =========== ========== ========== =========== ============ *Represents more than 5% of net assets available for plan benefits
10 H. Fund Data, continued: The following is a summary of changes in net assets available for plan benefits by fund for the period from July 11, 1997 to December 31, 1997:
Raytheon Fixed Equity Common Stock Balanced Magellan Income Fund Fund Stock Fund Index Fund Fund Fund Additions to net assets attributable to: Investment income: Net appreciation (depreciation) of investments $ 59,098 $(5,453,334) $1,652,781 $ (272,348) $ (143,992) Interest $ 752,433 60,107 18,465 Dividends 280,543 936,370 709,881 263,518 ----------- ---------- ----------- ----------- ---------- ---------- 752,433 339,641 (4,456,857) 1,671,246 437,533 119,526 ----------- ---------- ----------- ----------- ---------- ---------- Contributions and deferrals: Employee deferrals 4,538,948 4,361,426 2,447,309 5,260,391 1,778,081 3,157,807 Employer contributions 661,139 592,171 309,044 764,911 224,194 424,971 Transfers 22,672,912 76,796,394 19,365,848 5,048,298 ----------- ---------- ----------- ----------- ---------- ---------- 27,872,999 4,953,597 79,552,747 25,391,150 7,050,573 3,582,778 ----------- ---------- ----------- ----------- ---------- ---------- Total additions 28,625,432 5,293,238 75,095,890 27,062,396 7,488,106 3,702,304 ----------- ---------- ----------- ----------- ---------- ---------- Deductions from net assets attributable to: Distributions to participants 454,270 19,334 1,216,475 244,815 38,207 25,676 Administrative expenses 2,444 416 7,063 2,257 609 321 Transfers 11,020 10 ----------- ---------- ----------- ----------- ---------- ---------- Total deductions 456,714 19,750 1,234,558 247,082 38,816 25,997 ----------- ---------- ----------- ----------- ---------- ---------- Interfund transfers (772,193) 2,980,612 (10,102,411) 894,236 189,352 2,958,846 ----------- ---------- ----------- ----------- ---------- ---------- Increase (decrease) in net assets 27,396,525 8,254,100 63,758,921 27,709,550 7,638,642 6,635,153 Net assets available for plan benefits, beginning of year ----------- ---------- ----------- ----------- ---------- ---------- Net assets available for plan benefits, end of year $27,396,525 $8,254,100 $63,758,921 $27,709,550 $7,638,642 $6,635,153 =========== ========== =========== =========== ========== ========== 11 Templeton Investment Blue Chip Foreign I Grade Fund Fund Bond Fund Loan Fund Total Additions to net assets attributable to: Investment income: Net appreciation (depreciation) of investments $ (29,047) $ (826,396) $ 22,581 $ (4,990,657) Interest $ 473,613 1,304,618 Dividends 772,525 549,717 36,337 3,548,891 ----------- ---------- ---------- ----------- ------------ 743,478 (276,679) 58,918 473,613 (137,148) ----------- ---------- ---------- ----------- ------------ Contributions and deferrals: Employee deferrals 5,121,382 2,176,502 379,528 29,221,374 Employer contributions 801,233 330,882 43,226 4,151,771 Transfers 10,587,769 3,270,460 1,047,031 10,620,659 149,409,371 ----------- ---------- ---------- ----------- ------------ 16,510,384 5,777,844 1,469,785 10,620,659 182,782,516 ----------- ---------- ---------- ----------- ------------ Total additions 17,253,862 5,501,165 1,528,703 11,094,272 182,645,368 ----------- ---------- ---------- ----------- ------------ Deductions from net assets attributable to: Distributions to participants 183,388 21,473 13,063 151,082 2,367,783 Administrative expenses 1,415 297 82 14,904 Transfers 11,030 ----------- ---------- ---------- ----------- ------------ Total deductions 184,803 21,770 13,145 151,082 2,393,717 ----------- ---------- ---------- ----------- ------------ Interfund transfers 1,691,580 (8,219) 32,567 2,135,630 -- ----------- ---------- ---------- ----------- ------------ Increase (decrease) in net assets 18,760,639 5,471,176 1,548,125 13,078,820 180,251,651 Net assets available for plan benefits, beginning of year -- ----------- ---------- ---------- ----------- ------------ Net assets available for plan benefits, end of year $18,760,639 $5,471,176 $1,548,125 $13,078,820 $180,251,651 =========== ========== ========== =========== ============
12 I. Master Trust: All plan investments are included under the Master Trust. At December 31, 1997, assets of the Plan represented 5.1% of the total assets under the Master Trust. The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1997:
Raytheon Fixed Common Stock Balanced Magellan Income Fund Equity Fund Stock Fund Index Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $351,035,073 Prudential Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* $782,799,011 Raytheon Company Common Stock* $745,980,294 BT Pyramid Equity Index Fund* $484,781,406 Fidelity Balanced Fund $117,556,481 Fidelity Magellan Fund $91,863,155 Fidelity Blue Chip Fund Templeton Foreign I Fund Fidelity Investment Grade Bond Fund Fidelity Retirement Money Market Fund Loans receivable from participants ------------ ------------ ------------ ------------ ------------ ----------- Total investments 939,889,852 782,799,011 745,980,294 484,781,406 117,556,481 91,863,155 Receivables: Employer contribution Accrued investment income and other receivables 5,489,592 1,161,112 Cash and cash equivalents 9,232,100 13,498,051 4,761,268 ------------ ------------ ------------ ------------ ------------ ----------- Total assets 949,121,952 782,799,011 764,967,937 490,703,786 117,556,481 91,863,155 ------------ ------------ ------------ ------------ ------------ ----------- Liabilities: Payable for outstanding purchases 6,340,318 Accrued expenses and other payables 1,480,875 1,200,471 ------------ ------------ ------------ ------------ ------------ ----------- Total liabilities 7,821,193 1,200,471 ------------ ------------ ------------ ------------ ------------ ----------- Net assets available for plan benefits $949,121,952 $782,799,011 $757,146,744 $489,503,315 $117,556,481 $91,863,155 ============ ============ ============ ============ ============ =========== Percentage of Master Trust that are plan assets of the Raytheon TI Systems Savings Plan 2.9% 1.1% 8.4% 5.7% 6.5% 7.2% *Represents more than 5% of net assets available for plan benefits. N/A: The Retirement Money Market Fund is not available for the Raytheon TI Systems Savings Plan. 13 Templeton Investment Retirement Blue Chip Foreign I Grade Money Fund Fund Bond Fund Market Fund Loan Fund Total Assets: Investments: At contract value: Bankers Trust* $ 351,035,073 Prudential Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* 782,799,011 Raytheon Company Common Stock* 745,980,294 BT Pyramid Equity Index Fund* 484,781,406 Fidelity Balanced Fund 117,556,481 Fidelity Magellan Fund 91,863,155 Fidelity Blue Chip Fund $136,586,123 136,586,123 Templeton Foreign I Fund $5,471,176 5,471,176 Fidelity Investment Grade Bond Fund $1,548,125 1,548,125 Fidelity Retirement Money Market Fund $12,186,085 12,186,085 Loans receivable from participants $166,395,767 166,395,767 ------------ ---------- ---------- ----------- ------------ -------------- Total investments 136,586,123 5,471,176 1,548,125 12,186,085 166,395,767 3,485,057,475 Receivables: Employer contribution 4,015,100 4,015,100 Accrued investment income and other receivables 6,650,704 Cash and cash equivalents 27,491,419 ------------ ---------- ---------- ----------- ------------ -------------- Total assets 136,586,123 5,471,176 1,548,125 16,201,185 166,395,767 3,523,214,698 ------------ ---------- ---------- ----------- ------------ -------------- Liabilities: Payable for outstanding purchases 6,340,318 Accrued expenses and other payables 2,681,346 ------------ ---------- ---------- ----------- ------------ -------------- Total liabilities 9,021,664 ------------ ---------- ---------- ----------- ------------ -------------- Net assets available for plan benefits $136,586,123 $5,471,176 $1,548,125 $16,201,185 $166,395,767 $3,514,193,034 ============ ========== ========== =========== ============ ============== Percentage of Master Trust that are plan assets of the Raytheon TI Systems Savings Plan 13.7% 100% 100% N/A 7.9% 5.1% *Represents more than 5% of net assets available for plan benefits N/A: The Retirement Money Market Fund is not available for the Raytheon TI Systems Savings Plan.
14 I. Master Trust, continued: The following is a summary of investment income by fund under the Master Trust for the year ended December 31, 1997:
Raytheon Fixed Common Stock Balanced Magellan Blue Chip Income Fund Equity Fund Stock Fund Index Fund Fund Fund Fund Investment income: Net appreciation (depreciation)of assets $ (191,924) $132,974,182 $30,715,963 $109,162,707 $ 6,388,316 $ 9,026,047 $15,474,118 Interest 62,319,073 673,934 312,511 Dividends 42,443,971 11,118,152 13,680,351 5,217,835 6,302,875 ----------- ------------ ----------- ------------ ----------- ----------- ----------- Total investment income/(loss) $62,127,149 $175,418,153 $42,508,049 $109,475,218 $20,068,667 $14,243,882 $21,776,993 15 Templeton Investment Retirement Foreign I Grade Money Loan Fund Bond Fund Market Fund Fund Total Investment income: Net appreciation (depreciation)of assets $(826,396) $22,581 $302,745,594 Interest $10,848,204 74,153,722 Dividends 549,717 36,337 $266,835 79,616,073 --------- ------- -------- ----------- ------------ Total investment income/(loss) $(276,679) $58,918 $266,835 $10,848,204 $456,515,389
EX-99 14 1 EXHIBIT 99.6a CONSENT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Raytheon Company We consent to the incorporation by reference in the Registration Statement of Raytheon Company on Form S-8 (File No. 333-56117) of our report dated May 29, 1998 on our audit of the financial statements of the Raytheon TI Systems Savings Plan as of December 31, 1997 and for the period from July 11, 1997 to December 31, 1997, which report is included in this annual report on Form 10-K/A. Coopers & Lybrand LLP Boston, Massachusetts June 29, 1998 EX-99 15 1 EXHIBIT 99.7 RAYTHEON SALARIED SAVINGS AND INVESTMENT PLAN FINANCIAL STATEMENTS TO ACCOMPANY 1997 FORM 5500 ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN UNDER ERISA OF 1974 FOR THE PERIOD FROM DECEMBER 17, 1997 TO DECEMBER 31, 1997 The supplemental schedules required to accompany the Plan's Form 5500 are not required since the Plan's assets are held in a Master Trust. Accordingly, detailed financial information, including the supplemental schedules, must be filed separately with the Department of Labor by the plan administrator. REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Raytheon Company: We have audited the accompanying statement of net assets available for plan benefits of the Raytheon Salaried Savings and Investment Plan (the "Plan") as of December 31, 1997, and the related statement of changes in net assets available for plan benefits for the period from December 17, 1997 to December 31, 1997. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Plan as of December 31, 1997, and the changes in net assets available for plan benefits for the period from December 17, 1997 to December 31, 1997 in conformity with generally accepted accounting principles. Coopers & Lybrand LLP Boston, Massachusetts May 29, 1998 2 RAYTHEON SALARIED SAVINGS AND INVESTMENT PLAN STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS as of December 31, 1997 Assets: Master trust investments: At contract value (Notes B, E and G) $ 126,113 At fair value (Notes B, F and G) 3,228,259 --------- 3,354,372 --------- Receivables: Accrued investment income and other receivables 8,765 Cash and cash equivalents 24,181 --------- Total assets 3,387,318 --------- Liabilities: Payable for outstanding purchases 9,147 Accrued expenses and other payables 3,010 --------- Total liabilities 12,157 --------- Net assets available for plan benefits $3,375,161 ========== The accompanying notes are an integral part of the financial statements. 3 RAYTHEON SALARIED SAVINGS AND INVESTMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS for the period from December 17, 1997 to December 31, 1997 Additions to net assets attributable to: Investment income (Notes B, E and G): Net appreciation of investments $ 69,196 Interest 1,407 Dividends 16,039 ---------- 86,642 ---------- Contributions and deferrals: Employee deferrals 2,300,458 Employer contributions 988,061 ---------- 3,288,519 ---------- Total additions 3,375,161 ---------- Increase in net assets 3,375,161 Net assets available for plan benefits, beginning of year -- ---------- Net assets available for plan benefits, end of year $3,375,161 ========== The accompanying notes are an integral part of the financial statements. 4 A. Description of Plan: General The following description of the Raytheon Salaried Savings and Investment Plan (the "Plan") provides only general information. Participants should refer to the plan document for a complete description of the Plan's provisions. The Plan, which was established on December 17, 1997, is a defined contribution plan covering certain employees of Raytheon Company (the "Company"). Effective December 17, 1997, employees assumed in connection with the merger of the defense business of Hughes Electronics Corporation with the Company, that participated in the Hughes Salaried Employees' Thrift and Savings Plan, became eligible to participate in the Plan. Participants have the option to rollover amounts accumulated in plans sponsored by the defense business of Hughes Electronics Corporation to the plan. The option to make a rollover election will extend until December 1, 1998. Upon election, amounts will be rolled over into funds selected by the participant. As of December 31, 1997, no rollovers had been made; however, the ultimate amount to be transferred under this option cannot be estimated at this time. To participate in the Plan, eligible employees must have three months of service and may enter the Plan only on the first day of each month. The purpose of the Plan is to provide participants with a tax-effective means of meeting both short- and long-term investment objectives. The Plan is intended to be a "qualified cash or deferred arrangement" under Sections 401(a) and 401(k) of the Internal Revenue Code (the "Code"). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan's investments are held in the Raytheon Company Master Trust for defined contribution plans (the "Master Trust") with the assets of other defined contribution plans of Raytheon Company and subsidiaries. The trustee of the Master Trust maintains a separate account reflecting the equitable share in the Trust of each plan. Investment income and administrative expenses relating to the Master Trust are allocated to the individual plan based upon average monthly balances invested by each plan. Contributions and Deferrals Eligible employees are allowed to defer to the Plan up to 12% of their salaries. The Company contributes amounts equal to 100% of each participant's deferral, up to a maximum of 4% of the participant's salary. The contributions are invested in Raytheon Company common stock for two full plan years following the plan year for which the contributions are made, and are then allocated to participants' accounts. As of December 31, 1997, the annual employee deferral for a participant cannot exceed $9,500. Rollover contributions from other qualified plans are accepted by the Plan. Participants may invest their deferrals in increments of 1% in any combination of seven funds: (a) a Fixed Income Fund under which assets are invested primarily in contracts providing for fixed rates of interest for specified periods of time, (b) an Equity Fund which invests in shares of a mutual fund which consists primarily of income-producing equity securities, (c) a Raytheon Common Stock Fund which invests in shares of Raytheon Company Class B common stock, (d) a Stock Index Fund which invests in a commingled pool consisting primarily of equity securities and is designed to track the S&P 500 Index, (e) a Balanced Fund which invests in shares of a mutual fund which consists primarily of equity securities, bonds and money market instruments, (f) the Magellan Fund, a growth fund which invests primarily in equities of companies of all types and sizes, and (g) the Blue Chip Fund, a growth fund which invests primarily in equities of well known and established companies. Dividends and distributions from investments of the Equity Fund, the Raytheon Common Stock Fund, the Stock Index Fund, the Balanced Fund, the Magellan Fund and the Blue Chip Fund are reinvested in their respective funds; stock dividends, stock splits and similar changes are also reflected in the funds. 5 Participant Accounts Each participant's account is credited with the participant's deferral, the Company's contribution and an allocation of plan earnings. Plan earnings are allocated based on account balances by fund. Vesting Participants are immediately vested in their voluntary deferrals plus actual earnings thereon. Vesting requirements for employer contributions plus earnings thereon may vary depending upon when an employee became eligible to participate in the plan. Vesting generally occurs upon the earliest of the completion of five years of service or three years of Plan participation, or upon retirement, death, disability, or attainment of normal retirement age. Forfeitures of the nonvested portions of terminated participants' accounts are used to reduce required contributions of the Company. Distributions to Participants A participant may withdraw all or a portion of deferrals, employer contributions and related earnings upon attainment of age 59-1/2. For reasons of financial hardship, as defined in the Plan document, a participant may withdraw all or a portion of deferrals. On termination of employment, a participant will receive a lump-sum distribution unless the vested account is valued in excess of $3,500 and the participant elects to defer distribution. A retiree or a beneficiary of a deceased participant may defer the distribution until January of the year following attainment of age 65. There were no distributions to participants during the year. Loans to Participants A participant may borrow against a portion of the balance in the participant's account, subject to certain restrictions. The maximum amount of a loan is the lesser of one-half of the participant's vested account balance or $50,000. The minimum loan which may be granted is $500. The interest rate applied is equal to the prime rate published in the Wall Street Journal on the first business day in June and December of each year. Loans must be repaid over a period of up to 5 years by means of payroll deductions. In certain cases, the repayment period may be extended up to 15 years. Interest paid to the Plan on loans to participants is credited to the borrower's account in the investment fund to which repayments are made. Administrative Expenses Substantially all expenses of administering the Plan are paid by the plan participants. B. Summary of Significant Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting. 6 The Plan's investment contracts are fully benefit-responsive and are therefore included in the financial statements at their contract value, defined as net contributions and deferrals plus interest earned on the underlying investments at contracted rates. Because the investment contracts are fully benefit-responsive, contract values approximate fair value. Investments in mutual funds and the commingled pool are valued at the closing net asset value reported on the last business day of the year. Investments in securities (common stocks) traded on a national securities exchange are valued at the last reported sales price on the last business day of the year. Cash equivalents are short-term money market instruments and are valued at cost which approximates fair value. Security transactions are recorded on trade date. Except for its investment contracts (Note E), the Plan's investments are held by bank-administered trust funds. Payables for outstanding security transactions represent trades which have occurred but have not yet settled. The Plan presents in the statement of changes in net assets the net appreciation (depreciation) in the fair value of its investments which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. Dividend income is recorded on the ex-dividend date. Income from other investments is recorded as earned on an accrual basis. Benefits are recorded when paid. The preparation of the financial statements in conformity with generally accepted accounting principles requires the plan administrator to make significant estimates and assumptions that affect the reported amounts of net assets and liabilities available for benefits at the date of the financial statements and the change in net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from the estimates included in the financial statements. The Plan provides for various investment options in any combination of stocks, bonds, fixed income securities, mutual funds and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the statement of net assets available for plan benefits and the statement of changes in net assets available for plan benefits. C. Federal Income Tax Status: Given that the Plan was established effective December 17, 1997, the Plan has not received a tax determination letter to date. Raytheon Company has submitted an application with the Internal Revenue Service under the 401(b) regulation of the Internal Revenue Code and expects to receive the determination letter by December 31, 1998. The Plan administrator and the Plan's legal counsel believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, no provision for income taxes has been included in the Plan's financial statements. D. Plan Termination: Although it has not expressed any intention to do so, the Company reserves the right under the Plan at any time or times to discontinue its contributions and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, amounts in participants' accounts will be distributed in a single lump sum; if the participant does not consent to an immediate distribution, the amount can be transferred to another defined contribution plan sponsored by the Company. 7 E. Investment Contracts: The Plan invests in collateralized fixed income investment portfolios (with no expiration date), three of which are managed by insurance companies and one of which is managed by an investment management firm. The credited interest rates are adjusted semiannually to reflect the experienced and anticipated yields to be earned on such investments, based on their book value. The annualized average yield and credited interest rates were as follows: Annualized Average Credited Yield Interest Rate For the year ended December 31, 1997: Bankers Trust (WBS 92-485) 6.95% 6.95% Metropolitan Life Insurance Company (GIC GA-12908) 6.86% 6.86% Metropolitan Life Insurance Company (GIC GA-13659) 6.43% 6.43% Prudential Asset Management Company (GIC 917163-001) 6.99% 6.99% The contract values are subject to limitations in certain situations including large workforce reductions and plan termination. In the financial statements, the two Metropolitan Life Insurance Company contracts are recorded as one investment option. F. Related Party Transactions: In accordance with the provisions of the Plan, Fidelity Management Trust Company (the "Trustee") acts as the Plan's agent for purchases and sales of shares of Raytheon Company Class B common stock. These transactions are performed on the Master Trust level. For the Master Trust, purchases amounted to $200,689,057 and sales amounted to $102,165,608 for the year ended December 31, 1997. 8 G. Fund Data: The following is a summary of net assets available for plan benefits by fund as of December 31, 1997:
Non-Participant Participant-Directed Directed Fixed Raytheon Stock Raytheon Income Equity Common Index Balanced Magellan Blue Chip Common Fund Fund Stock Fund Fund Fund Fund Fund Stock Fund Total Assets: Master trust investments: At contract value: Bankers Trust $ 47,101 $ 47,101 Prudential Insurance Company of America 29,215 29,215 Metropolitan Life Insurance Company 49,797 49,797 At fair value: Fidelity Equity Income Fund* $534,021 534,021 Raytheon Company Common Stock* $ 92,888 $ 983,125 1,076,013 BT Pyramid Equity Index Fund* $353,515 353,515 Fidelity Balanced Fund* $236,387 236,387 Fidelity Magellan Fund* $616,257 616,257 Fidelity Blue Chip Fund* $412,066 412,066 -------- -------- ------- -------- -------- -------- -------- --------- ---------- Total investments 126,113 534,021 92,888 353,515 236,387 616,257 412,066 983,125 3,354,372 -------- -------- ------- -------- -------- -------- -------- --------- ---------- Receivables: Accrued investment income and other receivables 684 846 7,235 8,765 Cash and cash equivalents 1,239 1,681 3,469 17,792 24,181 -------- -------- ------- -------- -------- -------- -------- ---------- ---------- Total assets 127,352 534,021 95,253 357,830 236,387 616,257 412,066 1,008,152 3,387,318 -------- -------- ------- -------- -------- -------- -------- --------- ---------- Liabilities: Payable for security purchases 790 8,357 9,147 Accrued expenses and other payables 184 874 1,952 3,010 -------- -------- ------- -------- -------- -------- -------- -------- ---------- Total liabilities 974 874 10,309 12,157 -------- -------- ------- -------- -------- -------- -------- -------- ---------- Net assets available for plan benefits $127,352 $534,021 $ 94,279 $356,956 $236,387 $616,257 $412,066 $ 997,843 $3,375,161 ======== ======== ======== ======== ======== ======== ======== ========= ========== *Represents more than 5% of net assets available for plan benefits
9 G. Fund Data, continued: The following is a summary of changes in net assets available for plan benefits by fund for the period from December 17, 1997 to December 31, 1997:
Non-Participant Participant-Directed Directed Fixed Raytheon Stock Raytheon Income Equity Common Index Balanced Magellan Blue Chip Common Fund Fund Stock Fund Fund Fund Fund Fund Stock Fund Total Additions to net assets attributable to: Investment income: Net appreciation (depreciation) of investments $ 17,629 $ (715) $ 12,604 $ 5,108 $ 24,196 $ 16,187 $ (5,813) $ 69,196 Interest 13 89 238 941 1,407 Dividends 1,385 14,654 16,039 -------- -------- ------- -------- -------- -------- -------- -------- ---------- 139 17,629 759 12,842 5,108 24,196 16,187 9,782 86,642 -------- -------- ------- -------- -------- -------- -------- -------- ---------- Contributions and deferrals: Employee deferrals 127,218 516,425 93,354 344,118 231,299 592,124 395,920 2,300,458 Employer contributions 988,061 988,061 -------- -------- ------- -------- -------- -------- -------- -------- ---------- 127,218 516,425 93,354 344,118 231,299 592,124 395,920 988,061 3,288,519 -------- -------- ------- -------- -------- -------- -------- -------- ---------- Total additions 127,357 534,054 94,113 356,960 236,407 616,320 412,107 997,843 3,375,161 -------- -------- ------- -------- -------- -------- -------- -------- ---------- Interfund transfers (5) (33) 166 (4) (20) (63) (41) -- -------- -------- ------- -------- -------- -------- -------- -------- ---------- Increase in net assets 127,352 534,021 94,279 356,956 236,387 616,257 412,066 997,843 3,375,161 Net assets available for plan benefits, beginning of year -- -------- -------- ------- -------- -------- -------- -------- -------- ---------- Net assets available for plan benefits, end of year $127,352 $534,021 $94,279 $356,956 $236,387 $616,257 $412,066 $997,843 $3,375,161 ======== ======== ======= ======== ======== ======== ======== ======== ==========
10 All plan investments are included under the Master Trust. At December 31, 1997, assets of the Plan represented less than 1% of the total assets under the Master Trust. The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1997:
Fixed Raytheon Income Equity Common Stock Stock Index Balanced Magellan Fund Fund Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $351,035,073 Prudential Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* $782,799,011 Raytheon Company Common Stock* $745,980,294 BT Pyramid Equity Index Fund* $484,781,406 Fidelity Balanced Fund $117,556,481 Fidelity Magellan Fund $91,863,155 Fidelity Blue Chip Fund Templeton Foreign I Fund Fidelity Investment Grade Bond Fund Fidelity Retirement Money Market Fund Loans receivable from participants ------------ ------------ ------------ ------------ ------------ ----------- Total investments 939,889,852 782,799,011 745,980,294 484,781,406 117,556,481 91,863,155 ------------ ------------ ------------ ------------ ------------ ----------- Receivables: Employer contributions Accrued investment income and other receivables 5,489,592 1,161,112 Cash and cash equivalents 9,232,100 13,498,051 4,761,268 ------------ ------------ ------------ ------------ ------------ ----------- Total assets 949,121,952 782,799,011 764,967,937 490,703,786 117,556,481 91,863,155 Liabilities: Payable for outstanding purchases 6,340,318 Accrued expenses and other payables 1,480,875 1,200,471 ------------ ------------ ------------ ------------ ------------ ----------- Total liabilities 7,821,193 1,200,471 ------------ ------------ ------------ ------------ ------------ ----------- Net assets available for plan benefits $949,121,952 $782,799,011 $757,146,744 $489,503,315 $117,556,481 $91,863,155 ============ ============ ============ ============ ============ =========== Percentage of Master Trust that are plan assets of the Raytheon Salaried Savings and Investment Plan ^ ^ ^ ^ ^ ^ *Represents more than 5% of net assets available for plan benefits ^Represents less than 1% of plan assets under the Master Trust + As of December 31, 1997, there were no loans outstanding in the Raytheon Salaried Savings and Investment Plan. N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund, and Retirement Money Market Fund are not available to the Raytheon Salaried Savings and Investment Plan. 11 Templeton Investment Retirement Blue Chip Foreign I Grade Money Market Fund Fund Bond Fund Fund Loan Fund Total Assets: Investments: At contract value: Bankers Trust* $351,035,073 Prudential Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* 782,799,011 Raytheon Company Common Stock* 745,980,294 BT Pyramid Equity Index Fund* 484,781,406 Fidelity Balanced Fund 117,556,481 Fidelity Magellan Fund 91,863,155 Fidelity Blue Chip Fund $136,586,123 136,586,123 Templeton Foreign I Fund $5,471,176 5,471,176 Fidelity Investment Grade Bond Fund $1,548,125 1,548,125 Fidelity Retirement Money Market Fund $12,186,085 12,186,085 Loans receivable from participants $166,395,767 166,395,767 ------------ ---------- ---------- ----------- ------------ -------------- Total investments 136,586,123 5,471,176 1,548,125 12,186,085 166,395,767 3,485,057,475 ------------ ---------- ---------- ----------- ------------ -------------- Receivables: Employer contributions 4,015,100 4,015,100 Accrued investment income and other receivables 6,550,704 Cash and cash equivalents 27,491,419 ------------ ---------- ---------- ----------- ------------ -------------- Total assets 136,586,123 5,471,176 1,548,125 16,201,185 166,395,767 3,523,214,698 Liabilities: Payable for outstanding purchases 6,340,318 Accrued expenses and other payables 2,681,346 ------------ ---------- ---------- ----------- ------------ -------------- Total liabilities 9,021,664 ------------ ---------- ---------- ----------- ------------ -------------- Net assets available for plan benefits $136,586,123 $5,471,176 $1,548,125 $16,201,185 $166,395,767 $3,514,193,034 ============ ========== ========== =========== ============ ============== Percentage of Master Trust that are plan assets of the Raytheon Salaried Savings and Investment Plan ^ N/A N/A N/A + ^ *Represents more than 5% of net assets available for plan benefits ^Represents less than 1% of plan assets under the Master Trust + As of December 31, 1997, there were no loans outstanding in the Raytheon Salaried Savings and Investment Plan. N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund, and Retirement Money Market Fund are not available to the Raytheon Salaried Savings and Investment Plan.
12 H. Master Trust, Continued: The following is a summary of investment income by fund under the Master Trust for the year ended December 31, 1997:
Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Blue Chip Fund Fund Stock Fund Fund Fund Fund Fund Investment income: Net appreciation (depreciation) of investments $ (191,924) $132,974,182 $30,715,963 $109,162,707 $ 6,388,316 $ 9,026,047 $15,474,118 Interest 62,319,073 673,934 312,511 Dividends 42,443,971 11,118,152 13,680,351 5,217,835 6,302,875 ----------- ------------ ----------- ------------ ----------- ----------- ----------- Total investment income/(loss) $62,127,149 $175,418,153 $42,508,049 $109,475,218 $20,068,667 $14,243,882 $21,776,993 =========== ============ =========== ============ =========== =========== =========== 13 Templeton Investment Retirement Foreign I Grade Money Market Loan Fund Bond Fund Fund Fund Total Investment income: Net appreciation (depreciation) of investments $(826,396) $22,581 $302,745,594 Interest $10,848,204 74,153,722 Dividends 549,717 36,337 $266,835 79,616,073 --------- ------- -------- ----------- ------------ Total investment income/(loss) $(276,679) $58,918 $266,835 $10,848,204 $456,515,389 ========= ======= ======== =========== ============
EX-99 16 1 EXHIBIT 99.7a CONSENT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Raytheon Company We consent to the incorporation by reference in the Registration Statement of Raytheon Company on Form S-8 (File No. 333-56117) of our report dated May 29, 1998 on our audit of the financial statements of the Raytheon Salaried Savings and Investment Plan as of December 31, 1997 and for the period from December 17, 1997 to December 31, 1997, which report is included in this annual report on Form 10-K/A. Coopers & Lybrand LLP Boston, Massachusetts June 29, 1998 EX-99 17 1 EXHIBIT 99.8 RAYTHEON CALIFORNIA HOURLY SAVINGS AND INVESTMENT PLAN FINANCIAL STATEMENTS TO ACCOMPANY 1997 FORM 5500 ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN UNDER ERISA OF 1974 FOR THE PERIOD FROM DECEMBER 17, 1997 TO DECEMBER 31, 1997 The supplemental schedules required to accompany the Plan's Form 5500 are not required since the Plan's assets are held in a Master Trust. Accordingly, detailed financial information, including the supplemental schedules, must be filed separately with the Department of Labor by the plan administrator. REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Raytheon Company: We have audited the accompanying statement of net assets available for plan benefits of the Raytheon California Hourly Savings and Investment Plan (the "Plan") as of December 31, 1997 and the related statement of changes in net assets available for plan benefits for the period from December 17, 1997 to December 31, 1997. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Plan as of December 31, 1997, and the changes in net assets available for plan benefits for the period from December 17, 1997 to December 31, 1997 in conformity with generally accepted accounting principles. Coopers & Lybrand LLP Boston, Massachusetts May 29, 1998 2 RAYTHEON CALIFORNIA HOURLY SAVINGS AND INVESTMENT PLAN STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS as of December 31, 1997 Assets: Master trust investments: At contract value (Notes B, E and G) $ 9,712 At fair value (Notes B, F and G) 123,623 -------- 133,335 -------- Receivables: Accrued investment income and other receivables 367 Cash and cash equivalents 1,025 -------- Total assets 134,727 -------- Liabilities: Payable for outstanding purchases 405 Accrued expenses and other payables 112 -------- Total liabilities 517 -------- Net assets available for plan benefits $134,210 ======== The accompanying notes are an integral part of the financial statements. 3 RAYTHEON CALIFORNIA HOURLY SAVINGS AND INVESTMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS for the period from December 17, 1997 to December 31, 1997 Additions to net assets attributable to: Investment income (Notes B, E and G): Net appreciation of investments $ 2,358 Interest 61 Dividends 711 -------- 3,130 -------- Contributions and deferrals: Employee deferrals 89,670 Employer contributions 41,410 -------- 131,080 -------- Total additions 134,210 -------- Increase in net assets 134,210 Net assets available for plan benefits, beginning of year -- -------- Net assets available for plan benefits, end of year $134,210 ======== The accompanying notes are an integral part of the financial statements. 4 A. Description of Plan: General The following description of the Raytheon California Hourly Savings and Investment Plan (the "Plan") provides only general information. Participants should refer to the plan document for a complete description of the Plan's provisions. The Plan, which was established on December 17, 1997, is a defined contribution plan covering certain employees of Raytheon Company (the "Company"). Effective December 17, 1997, employees assumed in connection with the merger of the defense business of Hughes Electronics Corporation with the Company that participated in the Hughes California Hourly Employees' Thrift and Savings Plan, became eligible to participate in the Plan. Participants have the option to rollover amounts accumulated in plans sponsored by the defense business of Hughes Electronics Corporation to the Plan. The option to make a rollover election will extend until December 1, 1998. Upon election, amounts will be rolled over into funds selected by the participant. As of December 31, 1997, no rollovers had been made; however, the ultimate amount to be transferred under this option cannot be estimated at this time. To participate in the Plan, eligible employees must have three months of service and may enter the Plan only on the first day of each month. The purpose of the Plan is to provide participants with a tax-effective means of meeting both short- and long-term investment objectives. The Plan is intended to be a "qualified cash or deferred arrangement" under Sections 401(a) and 401(k) of the Internal Revenue Code (the "Code"). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan's investments are held in the Raytheon Company Master Trust for Defined Contribution Plans ("Master Trust") with the assets of other defined contribution plans of Raytheon Company and subsidiaries. The trustee of the Master Trust maintains a separate account reflecting the equitable share in the Trust of each plan. Investment income and administrative expenses relating to the Master Trust are allocated to the individual plans based upon average monthly balances invested by each plan. 5 Contributions and Deferrals Eligible employees are allowed to defer to the Plan up to 12% of their salaries. The Company contributes amounts equal to 100% of each participant's deferral, up to a maximum of 4% of the participant's salary. The contributions are invested in Raytheon Company Class B common stock for two full plan years following the plan year for which the contributions are made, and are then allocated to participants' accounts. As of December 31, 1997, the annual employee deferral for a participant cannot exceed $9,500. Rollover contributions from other qualified plans are accepted by the Plan. Participants may invest their deferrals in increments of 1% in any combination of seven funds: (a)a Fixed Income Fund under which assets are invested primarily in contracts providing for fixed rates of interest for specified periods of time, (b)an Equity Fund which invests in shares of a mutual fund which consists primarily of income-producing equity securities, (c)a Raytheon Common Stock Fund which invests in shares of Raytheon Company Class B common stock, (d)a Stock Index Fund which invests in a commingled pool consisting primarily of equity securities and is designed to track the S&P 500 Index, (e) a Balanced Fund which invests in shares of a mutual fund which consists primarily of equity securities, bonds and money market instruments, (f) the Magellan Fund, a growth fund which invests primarily in equities of companies of all types and sizes, and (g) the Blue Chip Fund, a growth fund which invests primarily in equities of well known and established companies. Dividends and distributions from investments of the Equity Fund, the Raytheon Common Stock Fund, the Stock Index Fund, the Balanced Fund, the Magellan Fund and the Blue Chip Fund are reinvested in their respective funds; stock dividends, stock splits and similar changes are also reflected in the funds. Participant Accounts Each participant's account is credited with the participant's deferral, the Company's contribution and an allocation of plan earnings. Plan earnings are allocated based on account balances by fund. Vesting Participants are immediately vested in their voluntary deferrals plus actual earnings thereon. Vesting requirements for employer contributions plus earnings thereon may vary depending upon when an employee became eligible to participate in the Plan. Vesting generally occurs upon the earliest of the completion of five years of service or three years of Plan participation or upon retirement, death, disability, or attainment of normal retirement age. Forfeitures of the nonvested portions of terminated participants' accounts are used to reduce required contributions of the Company. Distributions to Participants A participant may withdraw all or a portion of deferrals, employer contributions and related earnings upon attainment of age 59 1/2. For reasons of financial hardship, as defined in the Plan document, a participant may withdraw all or a portion of deferrals. On termination of employment, a participant will receive a lump-sum distribution unless the vested account is valued in excess of $3,500 and the participant elects to defer distribution. A retiree or a beneficiary of a deceased participant may defer the distribution until January of the year following attainment of age 65. There were no distributions to participants during the year. 6 Loans to Participants A participant may borrow against a portion of the balance in the participant's account, subject to certain restrictions. The maximum amount of a loan is the lesser of one-half of the participant's vested account balance or $50,000. The minimum loan which may be granted is $500. The interest rate applied is equal to the prime rate published in the Wall Street Journal on the first business day in June and December of each year. Loans must be repaid over a period of up to 5 years by means of payroll deductions. In certain cases, the repayment period may be extended up to 15 years. Interest paid to the Plan on loans to participants is credited to the borrower's account in the investment fund to which repayments are made. Administrative Expenses Substantially all expenses of administering the Plan are paid by the plan participants. B. Summary of Significant Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting. The Plan's investment contracts are fully benefit-responsive and are therefore included in the financial statements at their contract value, defined as net contributions and deferrals plus interest earned on the underlying investments at contracted rates. Because the investment contracts are fully benefit-responsive, contract values approximate fair value. Investments in mutual funds and the commingled pool are valued at the closing net asset value reported on the last business day of the year. Investments in securities (common stocks) traded on a national securities exchange are valued at the last reported sales price on the last business day of the year. Cash equivalents are short-term money market instruments and are valued at cost which approximates fair value. Security transactions are recorded on trade date. Except for its investment contracts (Note E), the Plan's investments are held by bank-administered trust funds. Payables for outstanding security transactions represent trades which have occurred but have not yet settled. The Plan presents in the statement of changes in net assets the net appreciation (depreciation) in the fair value of its investments which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. Dividend income is recorded on the ex-dividend date. Income from other investments is recorded as earned on an accrual basis. Benefits are recorded when paid. 7 The preparation of the financial statements in conformity with generally accepted accounting principles requires the plan administrator to make significant estimates and assumptions that affect the reported amounts of net assets and liabilities available for benefits at the date of the financial statements and the change in net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from the estimates included in the financial statements. The Plan provides for various investment options in any combination of stocks, bonds, fixed income securities, mutual funds and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the statement of net assets available for plan benefits and the statement of changes in net assets available for plan benefits. C. Federal Income Tax Status: Given that the Plan was established effective December 17, 1997, the Plan has not received a tax determination letter to date. Raytheon Company has submitted an application with the Internal Revenue Service under the 401(b) regulation of the Internal Revenue Code and expects to receive the determination letter by December 31, 1998. The Plan administrator and the Plan's legal counsel believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, no provision for income taxes has been included in the Plan's financial statements. D. Plan Termination: Although it has not expressed any intention to do so, the Company reserves the right under the Plan at any time or times to discontinue its contributions and to terminate the Plan subject to the provisions of ERISA. In the event of plan termination, amounts in participants' accounts will be distributed in a single lump sum; if the participant does not consent to an immediate distribution, the amount can be transferred to another defined contribution plan sponsored by the Company. E. Investment Contracts: The Plan invests in collateralized fixed income investment portfolios (with no expiration date), three of which are managed by insurance companies and one of which is managed by an investment management firm. The credited interest rates are adjusted semiannually to reflect the experienced and anticipated yields to be earned on such investments, based on their book value. The annualized average yield and credited interest rates were as follows: 8 Annualized Credited Average Interest Yield Rate For the year ended December 31, 1997: Bankers Trust (WBS 92-485) 6.95% 6.95% Metropolitan Life Insurance Company (GIC GA-12908) 6.86% 6.86% Metropolitan Life Insurance Company (GIC GA-13659) 6.43% 6.43% Prudential Asset Management Company (GIC 917163-001) 6.99% 6.99% The contract values are subject to limitations in certain situations including large workforce reductions and plan termination. In the financial statements, the two Metropolitan Life Insurance Company contracts are recorded as one investment option. F. Related Party Transactions: In accordance with the provisions of the Plan, Fidelity Management Trust Company (the "Trustee") acts as the Plan's agent for purchases and sales of shares of Raytheon Company Class B common stock. These transactions are performed on the Master Trust level. For the Master Trust, purchases amounted to $200,689,057 and sales amounted to $102,165,608 for the year ended December 31, 1997. 9 G. Fund Data: The following is a summary of net assets available for plan benefits by fund as of December 31, 1997:
Non-Participant Participant-Directed Directed Fixed Raytheon Stock Raytheon Income Equity Common Index Balanced Magellan Blue Chip Common Fund Fund Stock Fund Fund Fund Fund Fund Stock Fund Total Assets: Master trust investments: At contract value: Bankers Trust $3,627 $3,627 Prudential Insurance Company of America 2,250 2,250 Metropolitan Life Insurance Company 3,835 3,835 At fair value: Fidelity Equity Income Fund* $21,159 21,159 Raytheon Company Common Stock* $6,484 $41,198 47,682 BT Pyramid Equity Index Fund* $6,823 6,823 Fidelity Balanced Fund* $9,931 9,931 Fidelity Magellan Fund* $23,519 23,519 Fidelity Blue Chip Fund* $14,509 14,509 ------ ------- ------ ------ ------ ------- ------- ------- -------- Total investments 9,712 21,159 6,484 6,823 9,931 23,519 14,509 41,198 133,335 ------ ------- ------ ------ ------ ------- -------- ------- -------- Receivables: Accrued investment income and other receivables 48 16 303 367 Cash and cash equivalents 95 117 67 746 1,025 ------ ------- ------ ------ ------ ------- ------- ------- -------- Total assets 9,807 21,159 6,649 6,906 9,931 23,519 14,509 42,247 134,727 ------ ------- ------ ------ ------ ------- ------- ------- -------- Liabilities: Payable for security purchases 55 350 405 Accrued expenses and other payables 13 17 82 112 ------ ------- ------ ------ ------ ------- ------- ------- -------- Total liabilities 68 17 432 517 ------ ------- ------ ------ ------ ------- ------- ------- -------- Net assets available for plan benefits $9,807 $21,159 $6,581 $6,889 $9,931 $23,519 $14,509 $41,815 $134,210 ====== ======= ====== ====== ====== ======= ======= ======= ======== *Represents more than 5% of net assets available for plan benefits
10 G. Fund Data, continued: The following is a summary of changes in net assets available for plan benefits by fund for the period from December 17, 1997 to December 31, 1997:
Non-Participant Participant-Directed Directed Fixed Raytheon Stock Raytheon Income Equity Common Index Balanced Magellan Blue Chip Common Fund Fund Stock Fund Fund Fund Fund Fund Stock Fund Total Additions to net assets attributable to: Investment income: Net appreciation (depreciation) of investments $ 699 $ (40) $ 238 $ 214 $ 925 $ 570 $ (248) $ 2,358 Interest $ 10 7 5 39 61 Dividends 97 614 711 ------ ------- ------ ------ ------ ------- ------- ------ -------- 10 699 64 243 214 925 570 405 3,130 ------ ------- ------ ------ ------ ------- ------- ------ -------- Contributions and deferrals: Employee deferrals 9,797 20,460 6,517 6,646 9,717 22,594 13,939 89,670 Employer contributions 41,410 41,410 ------ ------- ------ ------ ------ ------- ------- ------- -------- 9,797 20,460 6,517 6,646 9,717 22,594 13,939 41,410 131,080 ------ ------- ------ ------ ------ ------- ------- ------- -------- Total additions 9,807 21,159 6,581 6,889 9,931 23,519 14,509 41,815 134,210 ------ ------- ------ ------ ------ ------- ------- ------- -------- Increase in net assets 9,807 21,159 6,581 6,889 9,931 23,519 14,509 41,815 134,210 Net assets available for plan benefits, beginning of year -- ------ ------- ------ ------ ------ ------- ------- ------- -------- benefits, end of year $9,807 $21,159 $6,581 $6,889 $9,931 $23,519 $14,509 $41,815 $134,210 ====== ======= ====== ====== ====== ======= ======= ======= ========
11 H. Master Trust: All plan investments are included under the Master Trust. At December 31, 1997, assets of the Plan represented less than 1% of the total assets under the Master Trust. The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1997:
Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Blue Chip Fund Fund Stock Fund Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $351,035,073 Prudential Insurance Company of America* 217,731,699 Insurance Company* 371,123,080 Fidelity Equity Income Fund* $782,799,011 Raytheon Company Common Stock* $745,980,294 BT Pyramid Equity Index Fund* $484,781,406 Fidelity Balanced Fund $117,556,481 Fidelity Magellan Fund $91,863,155 Fidelity Blue Chip Fund $136,586,123 Templeton Foreign I Fund Fidelity Investment Grade Bond Fund Money Market Fund Loans receivable from participants ------------ ------------ ------------ ------------ ------------ ----------- ------------ Total investments 939,889,852 782,799,011 745,980,294 484,781,406 117,556,481 91,863,155 136,586,123 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Receivables: Employer contribution Accrued investment income and other receivables 5,489,592 1,161,112 Cash and cash equivalents 9,232,100 13,498,051 4,761,268 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Total assets 949,121,952 782,799,011 764,967,937 490,703,786 117,556,481 91,863,155 136,586,123 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Liabilities: Payables for outstanding purchases 6,340,318 other payables 1,480,875 1,200,471 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Total liabilities 7,821,193 1,200,471 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Net assets available for plan benefits $949,121,952 $782,799,011 $757,146,744 $489,503,315 $117,556,481 $91,863,155 $136,586,123 ============ ============ ============ ============ ============ =========== ============ Percentage of Master Trust ^ ^ ^ ^ ^ ^ ^ that are plan assets of the Raytheon California Hourly Savings and Investment Plan *Represents more than 5% of net assets available for plan benefits ^Represents less than 1% of plan assets under the Master Trust + As of December 31, 1997, there were no loans outstanding in the Raytheon California Hourly Savings and Investment Plan. N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund, and Retirement Money Market Fund are not available for the Raytheon California Hourly Savings and Investment Plan. 12 Templeton Investment Retirement Foreign I Grade Money Loan Fund Bond Fund Market Fund Fund Total Assets: Investments: At contract value: Bankers Trust* $ 351,035,073 Prudential Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* 782,799,011 Raytheon Company Common Stock* 745,980,294 BT Pyramid Equity Index Fund* 484,781,406 Fidelity Balanced Fund 117,556,481 Fidelity Magellan Fund 91,863,155 Fidelity Blue Chip Fund 136,586,123 Templeton Foreign I Fund $5,471,176 5,471,176 Fidelity Investment Grade Bond Fund $1,548,125 1,548,125 Fidelity Retirement Money Market Fund $12,186,085 12,186,085 Loans receivable from participants $166,395,767 166,395,767 ---------- ---------- ----------- ------------ -------------- Total investments 5,471,176 1,548,125 12,186,085 166,395,767 3,485,057,475 ---------- ---------- ----------- ------------ -------------- Receivables: Employer contribution 4,015,100 4,015,100 Accrued investment income and other receivables 6,650,704 Cash and cash equivalents 27,491,419 ---------- ---------- ----------- ------------ -------------- Total assets 5,471,176 1,548,125 16,201,185 166,395,767 3,523,214,698 ---------- ---------- ----------- ------------ -------------- Liabilities: Payables for outstanding purchases 6,340,318 Accrued expenses and other payables 2,681,346 ---------- ---------- ----------- ------------ -------------- Total liabilities 9,021,664 ---------- ---------- ----------- ------------ -------------- Net assets available for plan benefits $5,471,176 $1,548,125 $16,201,185 $166,395,767 $3,514,193,034 ========== ========== =========== ============ ============== N/A N/A N/A + ^ *Represents more than 5% of net assets available for plan benefits ^Represents less than 1% of plan assets under the Master Trust + As of December 31, 1997, there were no loans outstanding in the Raytheon California Hourly Savings and Investment Plan. N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund, and Retirement Money Market Fund are not available for the Raytheon California Hourly Savings and Investment Plan.
13 H. Master Trust, continued: The following is a summary of investment income by fund under the Master Trust for the year ended December 31, 1997:
Fixed Raytheon Income Common Stock Balanced Magellan Blue Chip Fund Equity Fund Stock Fund Index Fund Fund Fund Fund Investment income: Net appreciation (depreciation) of assets $ (191,924) $132,974,182 $30,715,963 $109,162,707 $ 6,388,316 $ 9,026,047 $15,474,118 Interest 62,319,073 673,934 312,511 Dividends 42,443,971 11,118,152 13,680,351 5,217,835 6,302,875 ----------- ------------ ----------- ------------ ----------- ----------- ----------- Total investment income/(loss) $62,127,149 $175,418,153 $42,508,049 $109,475,218 $20,068,667 $14,243,882 $21,776,993 =========== ============ =========== ============ =========== =========== =========== 14 Templeton Investment Retirement Foreign I Grade Money Loan Fund Bond Fund Market Fund Fund Total Investment income: Net appreciation (depreciation) of assets $(826,396) $22,581 $302,745,594 Interest $10,848,204 74,153,722 Dividends 549,717 36,337 $266,835 79,616,073 --------- ------- ------- ----------- ------------ Total investment income/(loss) $(276,679) $58,918 $266,835 $10,848,204 $456,515,389 ========= ======= ======== =========== ============
EX-99 18 1 EXHIBIT 99.8a CONSENT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Raytheon Company We consent to the incorporation by reference in the Registration Statement of Raytheon Company on Form S-8 (File No. 333-56117) of our report dated May 29, 1998 on our audit of the financial statements of the Raytheon California Hourly Savings and Investment Plan as of December 31, 1997 and for the period from December 17, 1997 to December 31, 1997, which report is included in this annual report on Form 10-K/A. Coopers & Lybrand LLP Boston, Massachusetts June 29, 1998 EX-99 19 1 EXHIBIT 99.9 RAYTHEON TUCSON BARGAINING SAVINGS AND INVESTMENT PLAN FINANCIAL STATEMENTS TO ACCOMPANY 1997 FORM 5500 ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN UNDER ERISA OF 1974 FOR THE PERIOD FROM DECEMBER 17, 1997 TO DECEMBER 31, 1997 The supplemental schedules required to accompany the Plan's Form 5500 are not required since the Plan's assets are held in a Master Trust. Accordingly, detailed financial information, including the supplemental schedules, must be filed separately with the Department of Labor by the plan administrator. REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Raytheon Company: We have audited the accompanying statement of net assets available for plan benefits of the Raytheon Tucson Bargaining Savings and Investment Plan ("the Plan") as of December 31, 1997, and the related statement of changes in net assets available for plan benefits for the period from December 17, 1997 to December 31, 1997. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Plan as of December 31, 1997, and the changes in net assets available for plan benefits for the period from December 17, 1997 to December 31, 1997 in conformity with generally accepted accounting principles. Coopers & Lybrand LLP Boston, Massachusetts May 29, 1998 2 RAYTHEON TUCSON BARGAINING SAVINGS AND INVESTMENT PLAN STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS as of December 31, 1997 Assets: Master trust investments: At contract value (Notes B, E and G) $ 4,511 At fair value (Notes B, F and G) 84,493 ------- 89,004 ------- Receivables: Accrued investment income and other receivables 240 Cash and cash equivalents 657 ------- Total assets 89,901 ------- Liabilities: Payable for outstanding purchases 260 Accrued expenses and other payables 76 ------- Total liabilities 336 ------- Net assets available for plan benefits $89,565 ======= The accompanying notes are an integral part of the financial statements. 3 RAYTHEON TUCSON BARGAINING SAVINGS AND INVESTMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS for the period from December 17, 1997 to December 31, 1997 Additions to net assets attributable to: Investment income (Notes B, E and G): Net appreciation of investments $ 1,689 Interest 38 Dividends 455 ------- 2,182 ------- Contributions and deferrals: Employee deferrals 59,762 Employer contributions 27,621 ------- 87,383 ------- Total additions 89,565 ------- Increase in net assets 89,565 Net assets available for plan benefits, beginning of year -- ------- Net assets available for plan benefits, end of year $89,565 ======= The accompanying notes are an integral part of the financial statements. 4 A. Description of Plan: General The following description of the Raytheon Tucson Bargaining Savings and Investment Plan (the "Plan") provides only general information. Participants should refer to the plan document for a complete description of the Plan's provisions. The Plan, which was established on December 17, 1997, is a defined contribution plan covering certain employees of Raytheon Company (the "Company"). Effective December 17, 1997, employees assumed in connection with the merger of the defense business of Hughes Electronics Corporation with the Company that participated in the Hughes Tucson Bargaining Employees' Thrift and Savings Plan, became eligible to participate in the Plan. Participants have the option to rollover amounts accumulated in plans sponsored by the defense business of Hughes Electronics Corporation to the Plan. The option to make a rollover election will extend until December 1, 1998. Upon election, amounts will be rolled over into funds selected by the participant. As of December 31, 1997, no rollovers had been made; however, the ultimate amount to be transferred under this option cannot be estimated at this time. To participate in the Plan, eligible employees must have three months of service and may enter the Plan only on the first day of each month. The purpose of the Plan is to provide participants with a tax-effective means of meeting both short- and long-term investment objectives. The Plan is intended to be a "qualified cash or deferred arrangement" under Sections 401(a) and 401(k) of the Internal Revenue Code (the "Code"). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan's investments are held by the Raytheon Company Master Trust for Defined Contribution Plans ("Master Trust") with the assets of other defined contribution plans of Raytheon Company and subsidiaries. The trustee of the Master Trust maintains a separate account reflecting the equitable share in the Trust of each plan. Investment income and administrative expenses relating to the Master Trust are allocated to the individual plans based upon average monthly balances invested by each plan. Contributions and Deferrals Eligible employees are allowed to defer to the Plan up to 12% of their salaries. The Company contributes amounts equal to 100% of each participant's deferral, up to a maximum of 4% of the participant's salary. The contributions are invested in Raytheon Company Class B common stock for two full plan years following the plan year for which the contributions are made, and are then allocated to participants' accounts. As of December 31, 1997, the annual employee deferral for a participant cannot exceed $9,500. Rollover contributions from other qualified plans are accepted by the Plan. Participants may invest their deferrals in increments of 1% in any combination of seven funds: (a)a Fixed Income Fund under which assets are invested primarily in contracts providing for fixed rates of interest for specified periods of time, (b)an Equity Fund which invests in shares of a mutual fund which consists primarily of income-producing equity securities, (c)a Raytheon Common Stock Fund which invests in shares of Raytheon Company Class B common stock, (d)a Stock Index Fund which invests in a commingled pool consisting primarily of equity securities and is designed to track the S&P 500 Index, (e) a Balanced Fund which invests in shares of a mutual fund which consists primarily of equity securities, bonds and money market instruments, (f) the Magellan Fund, a growth fund which invests primarily in equities of companies of all types and sizes, and (g) the Blue Chip Fund, a growth fund which invests primarily in equities of well known and established companies. Dividends and distributions from investments of the Raytheon Common Stock Fund, the Equity Fund, the Stock Index Fund, the Balanced Fund, the Magellan Fund and the Blue Chip Fund are reinvested in their respective funds; stock dividends, stock splits and similar changes are also reflected in the funds. 5 Participant Accounts Each participant's account is credited with the participant's deferral, the Company's contribution and an allocation of plan earnings. Plan earnings are allocated based on account balances by fund. Vesting Participants are immediately vested in their voluntary deferrals plus actual earnings thereon. Vesting requirements for employer contributions plus earnings thereon may vary depending upon when an employee became eligible to participate in the Plan. Vesting generally occurs upon the earliest of the completion of five years of service or three years of Plan participation or upon retirement, death, disability, or attainment of normal retirement age. Forfeitures of the nonvested portions of terminated participants' accounts are used to reduce required contributions of the Company. Distributions to Participants A participant may withdraw all or a portion of deferrals, employer contributions and related earnings upon attainment of age 59-1/2. For reasons of financial hardship, as defined in the Plan document, a participant may withdraw all or a portion of deferrals. On termination of employment, a participant will receive a lump-sum distribution unless the vested account is valued in excess of $3,500 and the participant elects to defer distribution. A retiree or a beneficiary of a deceased participant may defer the distribution until January of the year following attainment of age 65. There were no distributions to participants during the year. Loans to Participants A participant may borrow against a portion of the balance in the participant's account, subject to certain restrictions. The maximum amount of a loan is the lesser of one-half of the participant's vested account balance or $50,000. The minimum loan which may be granted is $500. The interest rate applied is equal to the prime rate published in the Wall Street Journal on the first business day in June and December of each year. Loans must be repaid over a period of up to 5 years by means of payroll deductions. In certain cases, the repayment period may be extended up to 15 years. Interest paid to the Plan on loans to participants is credited to the borrower's account in the investment fund to which repayments are made. Administrative Expenses Substantially all expenses of administering the Plan are paid by the plan participants. 6 B. Summary of Significant Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting. The Plan's investment contracts are fully benefit-responsive and are therefore included in the financial statements at their contract value, defined as net contributions and deferrals plus interest earned on the underlying investments at contracted rates. Because the investment contracts are fully benefit-responsive, contract values approximate fair value. Investments in mutual funds and the commingled pool are valued at the closing net asset value reported on the last business day of the year. Investments in securities (common stocks) traded on a national securities exchange are valued at the last reported sales price on the last business day of the year. Cash equivalents are short-term money market instruments and are valued at cost which approximates fair value. Security transactions are recorded on trade date. Except for its investment contracts (Note E), the Plan's investments are held by bank-administered trust funds. Payables for outstanding security transactions represent trades which have occurred but have not yet settled. The Plan presents in the statement of changes in net assets the net appreciation (depreciation) in the fair value of its investments which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. Dividend income is recorded on the ex-dividend date. Income from other investments is recorded as earned on an accrual basis. Benefits are recorded when paid. The preparation of the financial statements in conformity with generally accepted accounting principles requires the plan administrator to make significant estimates and assumptions that affect the reported amounts of net assets and liabilities available for benefits at the date of the financial statements and the change in net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements Actual results could differ from the estimates included in the financial statements. The Plan provides for various investment options in any combination of stocks, bonds, fixed income securities, mutual funds and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the statement of net assets available for plan benefits and the statement of changes in net assets available for plan benefits. 7 C. Federal Income Tax Status: Given that the Plan was established effective December 17, 1997, the Plan has not received a tax determination letter to date. Raytheon Company has submitted an application with the Internal Revenue Service under the 401(b) regulation of the Internal Revenue Code and expects to receive the determination letter by December 31, 1998. The Plan administrator and the Plan's legal counsel believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, no provision for income taxes has been included in the Plan's financial statements. D. Plan Termination: Although it has not expressed any intention to do so, the Company reserves the right under the Plan at any time or times to discontinue its contributions and to terminate the Plan subject to the provisions of ERISA. In the event of plan termination, amounts in participants' accounts will be distributed in a single lump sum; if the participant does not consent to an immediate distribution, the amount can be transferred to another defined contribution plan sponsored by the Company. E. Investment Contracts: The Plan invests in collateralized fixed income investment portfolios (with no expiration date), three of which are managed by insurance companies and one of which is managed by an investment management firm. The credited interest rates are adjusted semiannually to reflect the experienced and anticipated yields to be earned on such investments, based on their book value. The annualized average yield and credited interest rates were as follows: Annualized Average Credited Yield Interest Rate For the year ended December 31, 1997: Bankers Trust (WBS 92-485) 6.95% 6.95% Metropolitan Life Insurance Company (GIC GA-12908) 6.86% 6.86% Metropolitan Life Insurance Company (GIC GA-13659) 6.43% 6.43% Prudential Asset Management Company (GIC 917163-001) 6.99% 6.99% The contract values are subject to limitations in certain situations including large workforce reductions and plan termination. In the financial statements, the two Metropolitan Life Insurance Company contracts are recorded as one investment option. F. Related Party Transactions: In accordance with the provisions of the Plan, Fidelity Management Trust Company (the "Trustee") acts as the Plan's agent for purchases and sales of shares of Raytheon Company Class B common stock. These transactions are performed on the Master Trust Level. For the Master Trust, purchases amounted to $200,689,057 and sales amounted to $102,165,608 for the year ended December 31, 1997. 8 G. Fund Data: The following is a summary of net assets available for plan benefits by fund as of December 31, 1997:
Non-Participant Participant-Directed Directed Fixed Raytheon Stock Raytheon Income Equity Common Index Balanced Magellan Blue Chip Common Fund Fund Stock Fund Fund Fund Fund Fund Stock Fund Total Assets: Master trust investments: At contract value: Bankers Trust $1,685 $ 1,685 Prudential Insurance Company of America 1,045 1,045 Metropolitan Life Insurance Company 1,781 1,781 At fair value: Fidelity Equity Income Fund* $18,557 18,557 Raytheon Company Common Stock* $3,075 27,479 30,554 BT Pyramid Equity Index Fund* $6,028 6,028 Fidelity Balanced Fund* $5,772 5,772 Fidelity Magellan Fund* $15,517 15,517 Fidelity Blue Chip Fund* $8,065 8,065 ------ ------- ------ ------ ------ ------- ------ ------- ------- Total investments 4,511 18,557 3,075 6,028 5,772 15,517 8,065 27,479 89,004 ------ ------- ------ ------ ------ ------- ------ ------- ------- Receivables: Accrued investment income and other receivables 23 14 203 240 Cash and cash equivalents 45 56 59 497 657 ------ ------- ------ ------ ------ ------- ------ ------- ------- Total assets 4,556 18,557 3,154 6,101 5,772 15,517 8,065 28,179 89,901 ------ ------- ------ ------ ------ ------- ------ ------- ------- Liabilities: Payable for security purchases 26 234 260 Accrued expenses and other payables 6 15 55 76 ------ ------- ------ ------ ------ ------- ------ ------- ------- Total liabilities 32 15 289 336 ------ ------- ------ ------ ------ ------- ------ ------- ------- Net assets available for plan benefits $4,556 $18,557 $3,122 $6,086 $5,772 $15,517 $8,065 $27,890 $89,565 ====== ======= ====== ====== ====== ======= ====== ======= ======= *Represents more than 5% of net assets available for plan benefits
9 G. Fund Data, continued: The following is a summary of changes in net assets available for plan benefits by fund for the period from December 17, 1997 to December 31, 1997:
Non-Participant Participant-Directed Directed Fixed Raytheon Stock Raytheon Income Equity Common Index Balanced Magellan Blue Chip Common Fund Fund Stock Fund Fund Fund Fund Fund Stock Fund Total Additions to net assets attributable to: Investment income: Net appreciation (depreciation) of investments $ 612 $ (18) $ 211 $ 125 $ 608 $ 317 $ (166) $ 1,689 Interest $ 5 3 4 26 38 Dividends 46 409 455 ------ ------- ------ ------ ------ ------- ------ ------ ------- 5 612 31 215 125 608 317 269 2,182 ------ ------- ------ ------ ------ ------- ------ ------ ------- Contributions and deferrals: Employee deferrals 4,551 17,945 3,091 5,871 5,647 14,909 7,748 59,762 Employer contributions 27,621 27,621 ------ ------- ------ ------ ------ ------- ------ ------ ------- 4,551 17,945 3,091 5,871 5,647 14,909 7,748 27,621 87,383 ------ ------- ------ ------ ------ ------- ------ ------ ------- Total additions 4,556 18,557 3,122 6,086 5,772 15,517 8,065 27,890 89,565 ------ ------- ------ ------ ------ ------- ------ ------ ------- Increase in net assets 4,556 18,557 3,122 6,086 5,772 15,517 8,065 27,890 89,565 Net assets available for plan benefits, beginning of year -- ------ ------- ------ ------ ------ ------- ------ ------ ------- Net assets available for plan benefits, end of year $4,556 $18,557 $3,122 $6,086 $5,772 $15,517 $8,065 $27,890 $89,565 ====== ======= ====== ====== ====== ======= ====== ======= =======
10 H. Master Trust: All plan investments are included under the Master Trust. At December 31, 1997, assets of the Plan represented less than 1% of the total assets under the Master Trust. The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1997:
Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Blue Chip Fund Fund Stock Fund Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $351,035,073 Prudential Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* $782,799,011 Raytheon Company Common Stock* $745,980,294 BT Pyramid Equity Index Fund* $484,781,406 Fidelity Balanced Fund $117,556,481 Fidelity Magellan Fund $91,863,155 Fidelity Blue Chip Fund $136,586,123 Templeton Foreign I Fund Fidelity Investment Grade Bond Fund Fidelity Retirement Money Market Fund Loans receivables from participants ------------ ------------ ------------ ------------ ------------ ----------- ------------ Total investments 939,889,852 782,799,011 745,980,294 484,781,406 117,556,481 91,863,155 136,586,123 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Receivables: Employer contributions Accrued investment income and other receivables 5,489,592 1,161,112 Cash and cash equivalents 9,232,100 13,498,051 4,761,268 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Total assets 949,121,952 782,799,011 764,967,937 490,703,786 117,556,481 91,863,155 136,586,123 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Liabilities: Payable for outstanding purchases 6,340,318 Accrued expenses and other payables 1,480,875 1,200,471 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Total liabilities 7,821,193 1,200,471 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Net assets available for plan benefits $949,121,952 $782,799,011 $757,146,744 $489,503,315 $117,556,481 $91,863,155 $136,586,123 ============ ============ ============ ============ ============ =========== ============ ^ ^ ^ ^ ^ ^ ^ Percentage of Master Trust that are plan assets of the Raytheon Tucson Bargaining Savings and Investment Plan *Represents more than 5% of net assets available for plan benefits ^Represents less than 1% plan assets under the Master Trust + As of December 31, 1997, there were no loans outstanding in the Raytheon Tucson Bargaining Savings and Investment Plan. N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund and Retirement Money Market Fund are not available for the Raytheon Tucson Bargaining Savings and Investment Plan. 11 Templeton Investment Retirement Foreign I Grade Money Loan Fund Bond Fund Market Fund Fund Total Assets: Investments: At contract value: Bankers Trust* $351,035,073 Prudential Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* 782,799,011 Raytheon Company Common Stock* 745,980,294 BT Pyramid Equity Index Fund* 484,781,406 Fidelity Balanced Fund 117,556,481 Fidelity Magellan Fund 91,863,155 Fidelity Blue Chip Fund 136,586,123 Templeton Foreign I Fund $5,471,176 5,471,176 Fidelity Investment Grade Bond Fund $1,548,125 1,548,125 Fidelity Retirement Money Market Fund $12,186,085 12,186,085 Loans receivables from participants $166,395,767 166,395,767 ---------- ---------- ----------- ------------ -------------- Total investments 5,471,176 1,548,125 12,186,085 166,395,767 3,485,057,475 ---------- ---------- ----------- ------------ -------------- Receivables: Employer contributions 4,015,100 4,015,100 Accrued investment income and other receivables 6,650,704 Cash and cash equivalents 27,491,419 ---------- ---------- ----------- ------------ -------------- Total assets 5,471,176 1,548,125 16,201,185 166,395,767 3,523,214,698 ---------- ---------- ----------- ------------ -------------- Liabilities: Payable for outstanding purchases 6,340,318 Accrued expenses and other payables 2,681,346 ---------- ---------- ----------- ------------ -------------- Total liabilities 9,021,664 ---------- ---------- ----------- ------------ -------------- Net assets available for plan benefits $5,471,176 $1,548,125 $16,201,185 $166,395,767 $3,514,193,034 ========== ========== =========== ============ ============== N/A N/A N/A + ^ Percentage of Master Trust that are plan assets of the Raytheon Tucson Bargaining Savings and Investment Plan *Represents more than 5% of net assets available for plan benefits ^Represents less than 1% plan assets under the Master Trust + As of December 31, 1997, there were no loans outstanding in the Raytheon Tucson Bargaining Savings and Investment Plan. N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund and Retirement Money Market Fund are not available for the Raytheon Tucson Bargaining Savings and Investment Plan. 12 H. Master Trust, continued: The following is a summary of investment income by fund under the Master Trust for the year ended December 31, 1997:
Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Blue Chip Fund Fund Stock Fund Fund Fund Fund Fund Investment income: Net appreciation (depreciation) of assets $ (191,924) $132,974,182 $30,715,963 $109,162,707 $ 6,388,316 $ 9,026,047 $15,474,118 Interest 62,319,073 673,934 312,511 Dividends 42,443,971 11,118,152 13,680,351 5,217,835 6,302,875 ----------- ------------ ----------- ------------ ----------- ----------- ----------- Total investment income/(loss) $62,127,149 $175,418,153 $42,508,049 $109,475,218 $20,068,667 $14,243,882 $21,776,993 =========== ============ =========== ============ =========== =========== =========== 13 Templeton Investment Retirement Foreign I Grade Money Fund Bond Fund Market Fund Loan Fund Total Investment income: Net appreciation (depreciation) of assets $(826,396) $22,581 $302,745,594 Interest $10,848,204 74,153,722 Dividends 549,717 36,337 $266,835 79,616,073 --------- ------- -------- ----------- ------------ Total investment income/(loss) $(276,679) $58,918 $266,835 $10,848,204 $456,515,589 ========= ======= ======== =========== ============
EX-99 20 1 EXHIBIT 99.9a CONSENT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Raytheon Company We consent to the incorporation by reference in the Registration Statement of Raytheon Company on Form S-8 (File No. 333-56117) of our report dated May 29, 1998 on our audit of the financial statements of the Raytheon Tucson Bargaining Savings and Investment Plan as of December 31, 1997 and for the period from December 17, 1997 to December 31, 1997, which report is included in this annual report on Form 10-K/A. Coopers & Lybrand LLP Boston, Massachusetts June 29, 1998 EX-99 21 1 EXHIBIT 99.10 RAYTHEON SAVINGS AND INVESTMENT PLAN (10014) FINANCIAL STATEMENTS TO ACCOMPANY 1997 FORM 5500 ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN UNDER ERISA OF 1974 FOR THE PERIOD FROM DECEMBER 17, 1997 TO DECEMBER 31, 1997 The supplemental schedules required to accompany the Plan's Form 5500 are not required since the Plan's assets are held in a Master Trust. Accordingly, detailed financial information, including the supplemental schedules, must be filed separately with the Department of Labor by the plan administrator. REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Raytheon Company: We have audited the accompanying statement of net assets available for plan benefits of the Raytheon Savings and Investment Plan (10014) (the "Plan") as of December 31, 1997, and the related statement of changes in net assets available for plan benefits for the period from December 17, 1997 to December 31, 1997. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Plan as of December 31, 1997, and the changes in net assets available for plan benefits for the period from December 17, 1997 to December 31, 1997 in conformity with generally accepted accounting principles. Coopers & Lybrand LLP Boston, Massachusetts May 29, 1998 2 RAYTHEON SAVINGS AND INVESTMENT PLAN (10014) STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS as of December 31, 1997 Assets: Master trust investments: At contract value (Notes B, E and G) $ 2,280 At fair value (Notes B, F and G) 59,325 ------- 61,605 ------- Receivables: Accrued investment income and other receivables 155 Cash and cash equivalents 426 ------- Total assets 62,186 ------- Liabilities: Payable for outstanding purchases 165 Accrued expenses and other payables 51 ------- Total liabilities 216 ------- Net assets available for plan benefits $61,970 ======= The accompanying notes are an integral part of the financial statements. 3 RAYTHEON SAVINGS AND INVESTMENT PLAN (10014) STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS for the period from December 17, 1997 to December 31, 1997 Additions to net assets attributable to: Investment income (Notes B, E and G): Net appreciation of investments $ 1,301 Interest 26 Dividends 289 ------- 1,616 Contributions and deferrals: Employee deferrals 44,616 Employer contributions 15,738 ------- 60,354 ------- Total additions 61,970 ------- Increase in net assets 61,970 Net assets available for plan benefits, beginning of year -- ------- Net assets available for plan benefits, end of year $61,970 ======= The accompanying notes are an integral part of the financial statements. 4 A. Description of Plan: General The following description of the Raytheon Savings and Investment Plan (10014)(the "Plan") provides only general information. Participants should refer to the plan document for a complete description of the Plan's provisions. The Plan, which was established on December 17, 1997, is a defined contribution plan covering certain employees of Raytheon Company (the "Company"). Effective December 17, 1997, employees assumed in connection with the merger of the defense business of Hughes Electronics Corporation with the Company that participated in the Hughes Thrift and Savings Plan, became eligible to participate in the Plan. Participants have the option to rollover amounts accumulated in plans sponsored by the defense business of Hughes Electronics Corporation to the Plan. The option to make a rollover election will extend until December 1, 1998. Upon election, amounts will be rolled over into funds selected by the participant. As of December 31, 1997, no rollovers had been made; however, the ultimate amount to be transferred under this option cannot be estimated at this time. To participate in the Plan, eligible employees must have three months of service and may enter the Plan only on the first day of each month. The purpose of the Plan is to provide participants with a tax-effective means of meeting both short- and long-term investment objectives. The Plan is intended to be a "qualified cash or deferred arrangement" under Sections 401(a) and 401(k) of the Internal Revenue Code (the "Code"). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan's investments are held in the Raytheon Company Master Trust for Defined Contribution Plans ("Master Trust") with the assets of other defined contribution plans of Raytheon Company and subsidiaries. The trustee of the Master Trust maintains a separate account reflecting the equitable share in the Trust of each plan. Investment income and administrative expenses relating to the Master Trust are allocated to the individual plans based upon average monthly balances invested by each plan. Contributions and Deferrals Eligible employees are allowed to defer to the Plan up to 10% of their salaries. The Company contributes amounts equal to 50% of each participant's deferral, up to a maximum of 3% of the participant's salary. The contributions are invested in Raytheon Company Class B common stock for two full plan years following the plan year for which the contributions are made, and are then allocated to the participants' accounts. As of December 31, 1997, the annual employee deferral for a participant cannot exceed $9,500. Rollover contributions from other qualified plans are accepted by the Plan. Participants may invest their deferrals in increments of 1% in any combination of seven funds: (a)a Fixed Income Fund under which assets are invested primarily in contracts providing for fixed rates of interest for specified periods of time, (b)an Equity Fund which invests in shares of a mutual fund which consists primarily of income-producing equity securities, (c) a Raytheon Common Stock Fund which invests in shares of Raytheon Company Class B common stock, (d) a Stock Index Fund which invests in a commingled pool consisting primarily of equity securities and is designed to track the S&P 500 Index, (e) a Balanced Fund which invests in shares of a mutual fund which consists primarily of equity securities, bonds and money market instruments, (f) the Magellan Fund, a growth fund which invests primarily in equities of companies of all types and sizes, and (g) the Blue Chip Fund, a growth fund which invests primarily in equities of well known and established companies. Dividends and distributions from investments of the Equity Fund, the Raytheon Common Stock Fund, the Stock Index Fund, the Balanced Fund, the Magellan Fund and the Blue Chip Fund are reinvested in their respective funds; stock dividends, stock splits and similar changes are also reflected in the funds. 5 Participant Accounts Each participant's account is credited with the participant's deferral, the Company's contribution and an allocation of plan earnings. Plan earnings are allocated based on account balances by fund. Vesting Participants are immediately vested in their voluntary deferrals plus actual earnings thereon. Vesting requirements for employer contributions plus earnings thereon may vary depending upon when an employee became eligible to participate in the Plan. Vesting generally occurs upon the earliest of the completion of five years of service or three years of Plan participation or upon retirement, death, disability, or attainment of normal retirement age. Forfeitures of the nonvested portions of terminated participants' accounts are used to reduce required contributions of the Company. Distributions to Participants A participant may withdraw all or a portion of deferrals, employer contributions and related earnings upon attainment of age 59-1/2. For reasons of financial hardship, as defined in the Plan document, a participant may withdraw all or a portion of deferrals. On termination of employment, a participant will receive a lump-sum distribution unless the vested account is valued in excess of $3,500 and the participant elects to defer distribution. A retiree or a beneficiary of a deceased participant may defer the distribution until January of the year following attainment of age 65. There were no distributions to participants during the year. Loans to Participants A participant may borrow against a portion of the balance in the participant's account, subject to certain restrictions. The maximum amount of a loan is the lesser of one-half of the participant's vested account balance or $50,000. The minimum loan which may be granted is $500. The interest rate applied is equal to the prime rate published in the Wall Street Journal on the first business day in June and December of each year. Loans must be repaid over a period of up to 5 years by means of payroll deductions. In certain cases, the repayment period may be extended up to 15 years. Interest paid to the Plan on loans to participants is credited to the borrower's account in the investment fund to which repayments are made. Administrative Expenses Substantially all expenses of administering the Plan are paid by the plan participants. B. Summary of Significant Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting. 6 The Plan's investment contracts are fully benefit-responsive and are therefore included in the financial statements at their contract value, defined as net contributions and deferrals plus interest earned on the underlying investments at contracted rates. Because the investment contracts are fully benefit-responsive, contract values approximate fair value. Investments in mutual funds and the commingled pool are valued at the closing net asset value reported on the last business day of the year. Investments in securities (common stocks) traded on a national securities exchange are valued at the last reported sales price on the last business day of the year. Cash equivalents are short-term money market instruments and are valued at cost which approximates fair value. Security transactions are recorded on trade date. Except for its investment contracts (Note E), the Plan's investments are held by bank-administered trust funds. Payables for outstanding security transactions represent trades which have occurred but have not yet settled. The Plan presents in the statement of changes in net assets the net appreciation (depreciation) in the fair value of its investments which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. Dividend income is recorded on the ex-dividend date. Income from other investments is recorded as earned on an accrual basis. Benefits are recorded when paid. The preparation of the financial statements in conformity with generally accepted accounting principles requires the plan administrator to make significant estimates and assumptions that affect the reported amounts of net assets and liabilities available for benefits at the date of the financial statements and the changes in net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from the estimates included in the financial statements. The Plan provides for various investment options in any combination of stocks, bonds, fixed income securities, mutual funds and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the statement of net assets available for plan benefits and the statement of changes in net assets available for plan benefits. C. Federal Income Tax Status: Given that the Plan was established effective December 17, 1997, the Plan has not received a tax determination letter to date. Raytheon Company has submitted an application with the Internal Revenue Service under the 401(b) regulation of the Internal Revenue Code and expects to receive the determination letter by December 31, 1998. The plan administrator and the Plan's legal counsel believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, no provision for income taxes has been included in the Plan's financial statements. 7 D. Plan Termination: Although it has not expressed any intention to do so, the Company reserves the right under the Plan at any time or times to discontinue its contributions and to terminate the Plan subject to the provisions of ERISA. In the event of plan termination, amounts in participants' accounts will be distributed in a single lump sum; if the participant does not consent to an immediate distribution, the amount can be transferred to another defined contribution plan sponsored by the Company. E. Investment Contracts: The Plan invests in collateralized fixed income investment portfolios (with no expiration date), three of which are managed by insurance companies and one of which is managed by an investment management firm. The credited interest rates are adjusted semiannually to reflect the experienced and anticipated yields to be earned on such investments, based on their book value. The annualized average yield and credited interest rates were as follows: Annualized Average Credited Yield Interest Rate For the year ended December 31, 1997: Bankers Trust (WBS 92-485) 6.95% 6.95% Metropolitan Life Insurance Company (GIC GA-12908) 6.86% 6.86% Metropolitan Life Insurance Company (GIC GA-13659) 6.43% 6.43% Prudential Asset Management Company (GIC 917163-001) 6.99% 6.99% The contract values are subject to limitations in certain situations including large workforce reductions and plan termination. In the financial statements, the two Metropolitan Life Insurance Company contracts are recorded as one investment option. F. Related Party Transactions: In accordance with the provisions of the Plan, Fidelity Management Trust Company (the "Trustee") acts as the Plan's agent for purchases and sales of shares of Raytheon Company common stock. These transactions are performed on the Master Trust level. For the Master Trust, purchases amounted to $200,689,057 and sales amounted to $102,165,608 for the year ended December 31, 1997. 8 G. Fund Data: The following is a summary of net assets available for plan benefits by fund as of December 31, 1997:
Non-Participant Participant-Directed Directed Fixed Raytheon Stock Raytheon Income Equity Common Index Balanced Magellan Blue Chip Common Stock Fund Fund Stock Fund Fund Fund Fund Fund Fund Total Assets: Master trust investments: At contract value: Bankers Trust $ 852 $ 852 Prudential Insurance Company of America 528 528 Metropolitan Life Insurance Company 900 900 At fair value: Fidelity Equity Income* $8,617 8,617 Raytheon Company Common Stock* $3,715 $15,666 19,381 BT Pyramid Equity Index Fund* $5,307 5,307 Fidelity Balanced Fund* $4,183 4,183 Fidelity Magellan Fund* $13,244 13,244 Fidelity Blue Chip Fund* $8,593 8,593 ------ ------ ------ ------ ------ ------- ------ ------- ------- Total investments 2,280 8,617 3,715 5,307 4,183 13,244 8,593 15,666 61,605 ------ ------ ------ ------ ------ ------- ------ ------- ------- Receivables: Accrued investment income and other receivables 27 12 116 155 Cash and cash equivalents 23 67 52 284 426 ------ ------ ------ ------ ------ ------- ------ ------- ------- Total assets 2,303 8,617 3,809 5,371 4,183 13,244 8,593 16,066 62,186 ------ ------ ------ ------ ------ ------- ------ ------- ------- Liabilities: Payable for security purchases 32 133 165 Accrued expenses and other payables 7 13 31 51 ------ ------ ------ ------ ------ ------- ------ ------- ------- Total liabilities 39 13 164 216 ------ ------ ------ ------ ------ ------- ------ ------- ------- Net assets available for plan benefits $2,303 $8,617 $3,770 $5,358 $4,183 $13,244 $8,593 $15,902 $61,970 ====== ====== ====== ====== ====== ======= ====== ======= ======= * Represents more than 5% of net assets available for plan benefits
9 G. Fund Data, continued: The following is a summary of changes in net assets available for plan benefits by fund for the period from December 17, 1997 to December 31, 1997:
Non-Participant Participant-Directed Directed Fixed Raytheon Stock Raytheon Income Equity Common Index Balanced Magellan Blue Chip Common Stock Fund Fund Stock Fund Fund Fund Fund Fund Fund Total Additions to net assets attributable to: Investment income: Net appreciation (depreciation) of investments $ 285 $ (35) $ 185 $ 90 $ 522 $ 338 $ (84) $ 1,301 Interest $ 3 4 4 15 26 Dividends 56 233 289 ------ ------ ------ ------ ------ ------- ------ ------- ------- 3 285 25 189 90 522 338 164 1,616 ------ ------ ------ ------ ------ ------- ------ ------- ------- Contributions and deferrals: Employee deferrals 2,300 8,332 3,745 5,169 4,093 12,722 8,255 44,616 Employer contributions 15,738 15,738 ------ ------ ------ ------ ------ ------- ------ ------- ------- 2,300 8,332 3,745 5,169 4,093 12,722 8,255 15,738 60,354 ------ ------ ------ ------ ------ ------- ------ ------- ------- Total additions 2,303 8,617 3,770 5,358 4,183 13,244 8,593 15,902 61,970 ------ ------ ------ ------ ------ ------- ------ ------- ------- Increase in net assets 2,303 8,617 3,770 5,358 4,183 13,244 8,593 15,902 61,970 Net assets, beginning of year ------ ------ ------ ------ ------ ------- ------ ------- ------- Net assets, end of year $2,303 $8,617 $3,770 $5,358 $4,183 $13,244 $8,593 $15,902 $61,970 ====== ====== ====== ====== ====== ======= ====== ======= =======
10 H. Master Trust: All plan investments are included under the Master Trust. At December 31, 1997, assets of the Plan represented less than 1% of the total assets under the Master Trust. The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1997:
Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Blue Chip Fund Fund Stock Fund Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $351,035,073 Prudential Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* $782,799,011 Raytheon Company Common Stock* $745,980,294 BT Pyramid Equity Index Fund* $484,781,406 Fidelity Balance Fund $117,556,481 Fidelity Magellan Fund $91,863,155 Fidelity Blue Chip Fund $136,586,123 Templeton Foreign I Fund Fidelity Investment grade Bond Fund Fidelity Retirement Money Market Fund Loans receivable from participants ------------ ------------ ------------ ------------ ------------ ----------- ------------ Total investments 939,889,852 782,799,011 745,980,294 484,781,406 117,556,481 91,863,155 136,586,123 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Receivables: Employer contribution Accrued Investment income and other receivables 5,489,592 1,161,112 Cash and cash equivalents 9,232,100 13,498,051 4,761,268 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Total assets 949,121,952 782,799,011 764,967,937 490,703,786 117,556,481 91,863,155 136,586,123 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Liabilities: Payables for outstanding purchases 6,340,318 Accrued expenses and other payables 1,480,875 1,200,471 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Total Liabilities 7,821,193 1,200,471 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Net assets available for plan benefits $949,121,952 $782,799,011 $757,146,744 $489,503,315 $117,556,481 $91,863,155 $136,586,123 ============ ============ ============ ============ ============ =========== ============ Percentage of Master Trust that ^ ^ ^ ^ ^ ^ ^ are plan assets of the Raytheon Savings and Investment Plan *Represents more than 5% of net assets available for plan benefits ^Represents less than 1% of plan assets under the Master Trust + As of December 31, 1997, there were no loans outstanding in the Raytheon Savings and Investment Plan (10014). N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund, and Retirement Money Market Fund are not available for the Raytheon Savings and Investment Plan (10014). 11 Templeton Investment Retirement Foreign I Grade Money Loan Fund Bond Fund Market Fund Fund Total Assets: Investments: At contract value: Bankers Trust* $ 351,035,073 Prudential Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* 782,799,011 Raytheon Company Common Stock* 745,980,294 BT Pyramid Equity Index Fund* 484,781,406 Fidelity Balance Fund 117,556,481 Fidelity Magellan Fund 91,863,155 Fidelity Blue Chip Fund 136,586,123 Templeton Foreign I Fund $5,471,176 5,471,176 Fidelity Investment grade Bond Fund $1,548,125 1,548,125 Fidelity Retirement Money Market Fund $12,186,085 12,186,085 Loans receivable from participants $166,395,767 166,395,767 ---------- ---------- ----------- ------------ -------------- Total investments 5,471,176 1,548,125 12,186,085 166,395,767 3,485,057,475 ---------- ---------- ----------- ------------ -------------- Receivables: Employer contribution 4,015,100 4,015,100 Accrued Investment income and other receivables 6,650,704 Cash and cash equivalents 27,491,419 ---------- ---------- ----------- ------------ -------------- Total assets 5,471,176 1,548,125 16,201,185 166,395,767 3,523,214,698 ---------- ---------- ----------- ------------ -------------- Liabilities: Payables for outstanding purchases 6,340,318 Accrued expenses and other payables 2,681,346 ---------- ---------- ----------- ------------ -------------- Total Liabilities 9,021,664 ---------- ---------- ----------- ------------ -------------- Net assets available for plan benefits $5,471,176 $1,548,125 $16,201,185 $166,395,767 $3,514,193,034 ========== ========== =========== ============ ============== N/A N/A N/A + ^ Percentage of Master Trust that are plan assets of the Raytheon Savings and Investment Plan (10014) *Represents more than 5% of net assets available for plan benefits ^Represents less than 1% of plan assets under the Master Trust + As of December 31, 1997, there were no loans outstanding in the Raytheon Savings and Investment Plan (10014). N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund, and Retirement Money Market Fund are not available for the Raytheon Savings and Investment Plan (10014).
12 I. Master Trust, continued: The following is a summary of investment income by fund under the Master Trust for the year ended December 31, 1997:
Fixed Raytheon Income Common Stock Balanced Magellan Blue Chip Fund Equity Fund Stock Fund Index Fund Fund Fund Fund Net appreciation (depreciation) of assets $ (191,924) $132,974,182 $30,715,963 $109,162,707 $ 6,388,316 $ 9,026,047 $15,474,118 Interest 62,319,073 673,934 312,511 Dividends 42,443,971 11,118,152 13,680,351 5,217,835 6,302,875 ----------- ------------ ----------- ------------ ----------- ----------- ----------- Total investment income/(loss) $62,127,149 $175,418,153 $42,508,049 $109,475,218 $20,068,667 $14,243,882 $21,776,993 =========== ============ =========== ============ =========== =========== =========== 13 Templeton Investment Retirement Foreign I Grade Money Loan Fund Bond Fund Market Fund Fund Total Investment income: Net appreciation (depreciation) of assets $(826,396) $22,581 $302,745,594 Interest $10,848,204 74,153,722 Dividends 549,717 36,337 $266,835 79,616,073 --------- ------- ------- ----------- ------------ Total investment income/(loss) $(276,679) $58,918 $266,835 $10,848,204 $456,515,389 ========= ======= ======== =========== ============
EX-99 22 1 EXHIBIT 99.10a CONSENT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Raytheon Company We consent to the incorporation by reference in the Registration Statement of Raytheon Company on Form S-8 (File No. 333-56117) of our report dated May 29, 1998 on our audit of the financial statements of the Raytheon Savings and Investment Plan (10014) as of December 31, 1997 and for the period from December 17, 1997 to December 31, 1997, which report is included in this annual report on Form 10-K/A. Coopers & Lybrand LLP Boston, Massachusetts June 29, 1998 -----END PRIVACY-ENHANCED MESSAGE-----