1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A- No.1 /X/ Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 1998. / / Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from............... to .............. Commission File Number 1-13699 RAYTHEON COMPANY (Exact Name of Registrant as Specified in its Charter) DELAWARE 95-1778500 (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.) 141 SPRING STREET, LEXINGTON, MASSACHUSETTS 02421 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (781) 862-6600 Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which Registered Class A Common Stock, $.01 par value New York Stock Exchange Class B Common Stock, $.01 par value Chicago Stock Exchange Series A Junior Participating Preferred Pacific Exchange Stock purchase rights Securities registered pursuant to Section 12(g) of the Act: NONE Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes .X. No ... Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
2 The aggregate market value of the voting stock held by non-affiliates of the Registrant, as of February 28, 1999, was approximately $17,823,904,334. For purposes of this disclosure, non-affiliates are deemed to be all persons other than members of the Board of Directors of the Registrant. Number of shares of Common Stock outstanding as of February 28, 1999: 336,184,525, consisting of 101,255,005 shares of Class A Common Stock and 234,929,520 shares of Class B Common Stock. Documents incorporated by reference and made a part of this Form 10-K: Portions of Raytheon's Annual Report Part I, Part II, Part IV to Stockholders for the fiscal year ended December 31, 1998. Portions of the Proxy Statement for Part III Raytheon's 1999 Annual Meeting filed with the Commission within 120 days after the close of Raytheon's fiscal year. The sole purpose of this Form 10-K/A is to file Annual Reports for the Registrant's various savings and investment plans. Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized. RAYTHEON COMPANY (REGISTRANT) By: /s/ Thomas D. Hyde Thomas D. Hyde Senior Vice President and General Counsel Date: June 30, 1999
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.
1 EXHIBIT 99.1 RAYTHEON SAVINGS AND INVESTMENT PLAN FINANCIAL STATEMENTS TO ACCOMPANY 1998 FORM 5500 ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN UNDER ERISA OF 1974 FOR THE YEAR ENDED DECEMBER 31, 1998 The supplemental schedules to the Plan's Form 5500 are not required since the Plan's assets are held in a Master Trust. Accordingly, the Plan administrator must file detailed financial information, including the supplemental schedules, separately with the Department of Labor.
2 REPORT OF INDEPENDENT ACCOUNTANTS To the Participants and Administrator of the Raytheon Savings and Investment Plan: In our opinion, the accompanying statements of net assets available for plan benefits and the related statement of changes in net assets available for plan benefits present fairly, in all material respects, the net assets available for benefits of the Raytheon Savings and Investment Plan (the "Plan") at December 31, 1998 and 1997, and the changes in net assets available for benefits for the year ended December 31, 1998 in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. PricewaterhouseCoopers LLP Boston, Massachusetts June 4, 1999
3 RAYTHEON SAVINGS AND INVESTMENT PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS as of December 31, 1998 and 1997 1998 1997 Assets: Master trust investments: At contract value (Notes B, E and I) $ 791,829,132 $ 772,455,041 At fair value (Notes B, F and I) 2,147,582,028 1,887,852,039 -------------- -------------- 2,939,411,160 2,660,307,080 -------------- -------------- Receivables: Accrued investment income and other receivables 3,214,568 3,765,409 Transfer receivables (Note H) 3,824,865,272 - Cash and cash equivalents 80,249,335 18,482,006 -------------- -------------- Total assets 6,847,740,335 2,682,554,495 -------------- -------------- Liabilities: Payable for outstanding purchases 861,953 3,213,981 Accrued expenses and other payables 1,415,440 1,766,653 -------------- -------------- Total liabilities 2,277,393 4,980,634 -------------- -------------- Net assets available for plan benefits $6,845,462,942 $2,677,573,861 ============== ============== The accompanying notes are an integral part of the financial statements.
4 RAYTHEON SAVINGS AND INVESTMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS for the year ended December 31, 1998 Additions to net assets attributable to: Investment income (Notes B, E and I): Net appreciation of investments $ 274,186,504 Interest & Dividends 125,514,753 -------------- 399,701,257 Contributions and deferrals: Employee deferrals 139,261,693 Employer contributions 40,567,458 Transfers (Note G and H) 3,844,113,615 -------------- 4,023,942,766 Total additions 4,423,644,023 -------------- Deductions from net assets attributable to: Distributions to participants 226,235,565 Administrative expenses 228,714 Transfers (Note G) 29,290,663 Total deductions 255,754,942 -------------- Increase in net assets 4,167,889,081 Net assets, beginning of year 2,677,573,861 -------------- Net assets, end of year $6,845,462,942 ============== The accompanying notes are an integral part of the financial statements.
5 RAYTHEON SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS A. Description of Plan: General The following description of the Raytheon Savings and Investment Plan (the "Plan"), provides only general information. Participants should refer to the plan document for a complete description of the Plan's provisions. As more fully described in Note H, effective January 1, 1999, the participants and related account balances of several defined contribution plans (collectively referred to as "Prior Plans") were merged into the Plan. The Plan is a defined contribution plan covering certain employees of Raytheon Company (the "Company"). To participate in the Plan, eligible employees must have three months of service and may enter the Plan only on the first day of each month. Effective January 1, 1999, eligible employees may join the Plan immediately, including employees from prior plans. The purpose of the Plan is to provide participants with a tax-effective means of meeting both short and long-term investment objectives. The Plan is intended to be a "qualified cash or deferred arrangement" under the Internal Revenue Code (the "Code"). In addition, effective January 1, 1999, the merger of the Raytheon Stock Ownership Plan and the Raytheon Stock Ownership Plan for Specified Hourly Payroll Employees (collectively referred to as "prior ESOP plans") creates an additional employee stock ownership portion (ESOP) of the Plan. The ESOP is intended to be an employee stock ownership arrangement in compliance with all of the related requirements for a qualified stock bonus plan as defined in the Code. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan's investments are held in the Raytheon Company Master Trust for Defined Contribution Plans ("Master Trust") with the assets of other defined contribution plans of the Company. The trustee of the Master Trust maintains a separate account reflecting the equitable share in the Trust of each plan. Investment income and administrative expenses relating to the Master Trust are allocated to the individual plan based upon average monthly balances invested by each plan. Contributions and Deferrals Eligible employees are allowed to defer to the Plan up to 17% of their salaries. The Company contributes amounts equal to 50% of each participant's deferral, up to a maximum of 3% of salary. The employee and Company contributions are invested based on participant elections. For 1998, the annual employee deferral for a participant cannot exceed $10,000. Rollover contributions from other qualified plans are accepted by the Plan.
6 Effective January 1, 1999, employees are allowed to defer up to 20% of their compensation to the Plan, except for certain employees from Prior Plans who are limited to 17%. Employee contributions, including rollovers, are invested based on participant elections. The Company will match contribution amounts equal to 100% of each participant's deferral, up to a maximum of 4% of compensation. The Company match shall be made to the Raytheon Common Stock Fund and must be held in that fund until the beginning of the fifth Plan Year following the Plan Year for which the contribution was made. The Company will also make an ESOP contribution equal to one-half of one percent of the participant's compensation. The ESOP portion of the Plan provides for investment, primarily in Raytheon Company Class B common stock; however, as required by the Code, the Plan permits limited diversification after a participant attains age 55 or completes 10 years of plan participation (including participation in the prior ESOP plans). Participants may invest their deferrals in increments of 1% in any combination of seven funds: (a) a Fixed Income Fund under which assets are invested primarily in contracts providing for fixed rates of interest for specified periods of time, (b) the Fidelity Equity Income Fund which invests in shares of a mutual fund consisting primarily of income-producing equity securities, (c) a Raytheon Common Stock Fund which invests in shares of Raytheon Company common stock, (d) a Stock Index Fund which invests in a commingled pool consisting primarily of equity securities and is designed to track the S&P 500 Index, (e) the Fidelity Balanced Fund which invests in shares of a mutual fund consisting primarily of equity securities, bonds and money market instruments, (f) the Fidelity Magellan Fund, a growth fund which invests primarily in equities of companies of all types and sizes, and (g) the Fidelity Blue Chip Fund, a growth fund which invests primarily in equities of well known and established companies. In addition, certain employees who transferred into the Plan were allowed to maintain small balances in other fund options that become available to all participants in 1999. Dividends and distributions from investments of all fund options are reinvested in their respective funds; stock dividends, stock splits and similar changes are also reflected in the funds. Effective January 1, 1999, the Plan will offer several additional fund options that were available in Prior Plans. These options include: Templeton Foreign I Fund - a long-term capital growth fund which invests in stocks and debt obligations of companies and governments of any nation. Vanguard Morgan Growth Fund - investments consist primarily of common stocks of corporations with either established growth patterns, emerging growth potential, or cyclical growth patterns. Vanguard Windsor Fund - investments consist of a portfolio of common stocks, the objective of which is primarily long-term growth and secondarily, current income through dividends.
7 Vanguard Wellesley Income Fund - investments consist of about 60% fixed-income securities and 40% common stocks. The Fund objective is primarily current income through dividends, and secondarily, moderate capital growth. T. Rowe Price Small Cap Stock Fund - invests in equity securities of small, high growth potential companies. RTN-A Wasting Fund and GMH Wasting Fund - hold shares of Raytheon Company Class A common stock or General Motors Class H common stock, respectively, that were transferred into the Plan from Prior Plans. These options will not be open for additional contributions and will only be available through December 31, 2002. Participant Accounts Each participant's account is credited with the participant's deferral, the Company's contribution and an allocation of plan earnings. Plan earnings are allocated based on account balances by fund. Vesting Participants are immediately vested in their voluntary deferrals plus actual earnings thereon. Vesting requirements for employer contributions plus earnings thereon may vary depending upon when an employee became eligible to participate in the Plan. Vesting generally occurs upon completion of five years of service or upon three years of Plan participation or upon retirement, death, disability, or attainment of normal retirement age. Forfeitures of the non-vested portions of terminated participants' accounts are used to reduce required contributions of the Company. Effective January 1, 1999, all employee and employer contributions and earnings thereon are fully and immediately 100% vested. Distributions to Participants A participant may withdraw all or a portion of deferrals, employer contributions and related earnings upon attainment of age 59 1/2. For reasons of financial hardship, as defined in the plan document, a participant may withdraw all or a portion of deferrals. On termination of employment, a participant will receive a lump-sum distribution unless the vested account is valued in excess of $3,500, ($5,000 effective January 1, 1999) and the participant elects to defer distribution. A retiree or a beneficiary of a deceased participant may defer the distribution until January of the year following attainment of age 65.
8 Loans to Participants A participant may borrow against a portion of the balance in the participant's account, subject to certain restrictions. The maximum amount of a loan is the lesser of one-half of the participant's account balance or $50,000. The minimum loan, which may be granted, is $500. The interest rate applied is equal to the prime rate published in the Wall Street Journal on the first business day in June and December of each year. Loans must be repaid over a period of up to five years by means of payroll deductions. In certain cases, the repayment period may be extended up to 15 years. Interest paid to the Plan on loans to participants is credited to the borrower's account in the investment fund to which repayments are made. Administrative Expenses The Plan participants pay substantially all expenses of administering the Plan. B. Summary of Significant Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting. The Plan's investment contracts are fully benefit-responsive and are therefore included in the financial statements at their contract value, defined as net employee contributions plus interest earned on the underlying investments at contracted rates. Contract values approximate fair value. Investments in mutual funds and the commingled pool are valued a the closing net asset value reported on the last business day of the year. Investments in securities (common stocks) traded on a national securities exchange are valued at the last reported sales price on the last business day of the year. Cash equivalents are short-term money market instruments and are valued at cost, which approximates fair value. Security transactions are recorded on the trade date. Except for its investment contracts (Note E), the Plan's investments are held by bank-administered trust funds. Payables for outstanding security transactions represent trades, which have occurred but have not yet settled. The Plan presents in the statement of changes in net assets the net appreciation (depreciation) in the fair value of its investments, which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. Dividend income is recorded on the ex-dividend date. Income from other investments is recorded as earned on an accrual basis. Investment income includes both dividends and interest income. Benefits are recorded when paid.
9 Certain items in the 1997 financial statements have been reclassified to conform to the 1998 presentation. The preparation of the financial statements, in conformity with generally accepted accounting principles, requires the Plan administrator to make significant estimates and assumptions that affect the reported amounts of net assets and liabilities available for benefits at the date of the financial statements and the changes in net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from the estimates included in the financial statements. The Plan provides for various investment options in any combination of stocks, bonds, fixed income securities, mutual funds and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the statement of net assets available for plan benefits and the statement of changes in net assets available for plan benefits. C. Federal Income Tax Status: The Internal Revenue Service has determined and informed the Company by letter dated July 1995 that the Plan and related trust are designed in accordance with applicable sections of the Code. The Plan has been amended since receiving the determination letter. However, the Plan administrator and the Plan's legal counsel believe that the Plan is currently designed and being operated in compliance with applicable requirements of the Code. Therefore, no provision for income taxes has been included in the Plan's financial statements. D. Plan Termination: Although it has not expressed any intention to do so, the Company reserves the right under the Plan at any time or times to discontinue its contributions and to terminate the Plan subject to the provisions of ERISA. In the event of plan termination, after payment of all expenses and proportional adjustment of accounts to reflect such expenses, fund losses or profits, and reallocations, each participant shall be entitled to receive any amounts then credited to his or her account.
10 E. Investment Contracts: The Plan invests in collateralized fixed income investment portfolios (with no expiration date), which are managed by insurance companies and investment management firms. The credited interest rates are adjusted semiannually to reflect the experienced and anticipated yields to be earned on such investments, based on their book value. The annualized average yield and credited interest rates were as follows: Annualized Credited Average Yield Interest Rate For the year ended December 31, 1998: Banker's Trust (WBS 92-485) 6.85% 6.85% Metropolitan Life Insurance Company (GIC GA-12908) 6.58% 6.58% Metropolitan Life Insurance Company (GIC GA-13659) 6.10% 6.10% Prudential Asset Management Company (GIC 917163-001) 6.75% 6.75% Connecticut General (GIC 0025174) 5.58% 5.58% Fidelity IPL (633-GCDC) 5.62% 5.62% Monumental Life Insurance Company (GIC BDA00463FR-00) 7.84% 7.84% For the year ended December 31, 1997: Banker's Trust (WBS 92-485) 6.95% 6.95% Metropolitan Life Insurance Company (GIC GA-12908) 6.86% 6.86% Metropolitan Life Insurance Company (GIC GA-13659) 6.43% 6.43% Prudential Asset Management Company (GIC 917163-001) 6.99% 6.99% The contract values are subject to limitations in certain situations including large workforce reductions and plan termination. In the financial statements the two Metropolitan Life Insurance Company contracts are recorded as one investment option. F. Related Party Transactions: The Plan's trustee is Fidelity Management Trust Company (the "Trustee"). The Trustee holds the funds for the Plan and is responsible for managing the Plan's investment assets, executing all investment transactions, recording approved transactions, and, therefore these transactions qualify as party-in-interest. In accordance with the provisions of the Plan, the Trustee acts as the Plan's agent for purchases and sales of shares of Raytheon Company common stock. These transactions are performed on a Master Trust level. For the Master Trust, purchases amounted to $288,116,995 and sales amounted to $257,878,566 for the year ended December 31, 1998.
11 G. Transfers: Transfers include transfers of participant accounts, individually and/or in-groups, between the Plan and all other plans included in the Raytheon Company Master Trust for those participants and/or groups of participants who changed plans during the year. Transfers also include transfers of participant accounts, individually and/or in-groups, between the Plan and similar savings plans of other companies for those participants who changed companies during the year. H. Transfer Receivables: As part of an overall effort to minimize plan design differences and increase administrative efficiencies, the Board of Directors of Raytheon Company voted on December 16, 1998 to merge the participants and their account balances from several Prior Plans into the Plan. The Prior Plans ceased to exist on December 31, 1998 and effective January 1, 1999 the plan provisions of the Plan govern. The transfer receivable by Prior Plan is as follows: Raytheon Salaried Savings and Investment Plan $2,188,796,696 E-Systems, Inc. Employee Savings Plan 744,493,356 Raytheon TI Systems Savings Plan 255,787,439 Raytheon Savings and Investment Plan for Specified Hourly Payroll Employees 233,308,197 Raytheon Stock Ownership Plan 219,416,215 Raytheon STX Corporation 401(k) Retirement Plan 89,317,908 Raytheon California Hourly Savings and Investment Plan 59,818,911 Raytheon Stock Ownership Plan for Specified Hourly Payroll Employees 29,965,013 Standard Missile 401(k) Plan 3,961,537 -------------- Total $3,824,865,272 ==============
12 I. Fund Data: The following is a summary of net assets available for plan benefits by fund as of December 31, 1998: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Blue Chip Fund Fund Stock Fund Fund Fund Fund Fund Assets: Master trust investments: At contract value: Bankers Trust $278,760,941 Prudential Insurance Company of America 139,592,355 Metropolitan Life Insurance Company* 350,379,445 Fidelity 15,198,859 Connecticut General 3,851,325 Monumental Life Insurance Company 4,046,207 At fair value: Fidelity Equity Income Fund* $691,209,765 Raytheon Company Common Stock Fund* $356,701,412 BT Pyramid Equity Index Fund* $519,296,605 Fidelity Balanced Fund $126,343,413 Fidelity Magellan Fund $135,325,150 Fidelity Blue Chip Fund $191,248,790 Fidelity Retirement Money Market Vanguard Winsor Vanguard Wellesley TRP Small Cap Stock Loans receivable from participants ------------ ------------ ------------ ------------ ------------ ------------ ------------ Total investments 791,829,132 691,209,765 356,701,412 519,296,605 126,343,413 135,325,150 191,248,790 ------------ ------------ ------------ ------------ ------------ ------------ ------------ Receivables: Accrued investment income and other receivables 2,118,587 1,095,981 Transfer receivables Cash and cash equivalents 73,020,876 4,909,081 2,319,378 ------------ ------------ ------------ ------------ ------------ ------------ ------------ Total assets 864,850,008 691,209,765 363,729,080 522,711,964 126,343,413 135,325,150 191,248,790 ------------ ------------ ------------ ------------ ------------ ------------ ------------ Liabilities: Payable for outstanding purchases 861,953 Accrued expenses and other payables 826,930 588,510 ------------ ------------ ------------ ------------ ------------ ------------ ------------ Total liabilities - - 1,688,883 588,510 - - - ------------ ------------ ------------ ------------ ------------ ------------ ------------ Net assets available for plan benefits $864,850,008 $691,209,765 $362,040,197 $522,123,454 $126,343,413 $135,325,150 $191,248,790 ============ ============ ============ ============ ============ ============ ============
13 Templeton Retirement Vanguard Vanguard TRP Foreign I Money Winsor Wellesley Cap Stock Fund Market Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust Prudential Life Insurance Company of America Metropolitan Life Insurance Company* Fidelity Connecticut General Monumental Life Insurance Company At fair value: Fidelity Equity Income Fund* Raytheon Company Common Stock Fund* BT Pyramid Equity Index Fund* Fidelity Balanced Fund Fidelity Magellan Fund Templeton Foreign I Fund $ 52 Fidelity Retirement Money Market $ 82,195 Vanguard Winsor $ 41 Vanguard Wellesley $ 18 TRP Small Cap Stock $ 348 Loans receivable from participants -------- ----------- -------- -------- -------- Total investments 52 82,195 41 18 348 -------- ----------- -------- -------- -------- Receivables: Accrued investment income and other receivables Transfer receivables Cash and cash equivalents -------- ----------- -------- -------- -------- Total assets 52 82,195 41 18 348 -------- ----------- -------- -------- -------- Liabilities: Payables for outstanding purchases Accrued expenses and other payables -------- ----------- -------- -------- -------- Total liabilities - - - - - -------- ----------- -------- -------- -------- Net assets available for plan benefits $ 52 $ 82,195 $ 41 $ 18 $ 348 ======== =========== ======== ======== ========
14 Loan Fund Other(1) Total Assets: Investments: At contract value: Bankers Trust $ 278,760,941 Prudential Life Insurance Company of America 139,592,355 Metropolitan Life Insurance Company* 350,379,445 Fidelity 15,198,859 Connecticut General 3,851,325 Monumental Life Insurance Company 4,046,207 At fair value: Fidelity Equity Income Fund* 691,209,765 Raytheon Company Common Stock Fund* 356,701,412 BT Pyramid Equity Index Fund* 519,296,605 Fidelity Balanced Fund 126,343,413 Fidelity Magellan Fund 135,325,150 Fidelity Blue Chip Fund 191,248,790 Templeton Foreign I Fund 52 Fidelity Retirement Money Market 82,195 Vanguard Winsor 41 Vanguard Wellesley 18 TRP Small Cap Stock 348 Loans receivable from participants $127,374,239 127,374,239 ------------ -------------- -------------- Total investments 127,374,239 - 2,939,411,160 ------------ -------------- -------------- Receivables: Accrued investment income and other receivables 3,214,568 Transfer receivables $3,824,865,272 3,824,865,272 Cash and cash equivalents 80,249,335 ------------ -------------- -------------- Total assets 127,374,239 3,824,865,272 6,847,740,335 ------------ -------------- -------------- Liabilities: Payables for outstanding purchases 861,953 Accrued expenses and other payables 1,415,440 ------------ -------------- -------------- Total liabilities - - 2,277,393 ------------ -------------- -------------- Net assets available for plan benefits $127,374,239 $3,824,865,272 $6,845,462,942 ============ ============== ============== (1) See Note H.
15 I. Fund Data, Continued: The following is a summary of net assets available for plan benefits by fund as of December 31, 1997: Raytheon Fixed Equity Common Stock Balanced Magellan Income Fund Fund Stock Fund Index Fund Fund Fund 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
16 Blue Chip Loan Fund 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 participant $118,487,487 118,487,487 ------------ ------------ -------------- Total investments 104,583,449 118,487,487 2,660,307,080 ------------ ------------ -------------- Receivables: Accrued investment income and other receivables 3,765,409 Cash and cash equivalents 18,482,006 ------------ ------------ -------------- Total assets 104,583,449 118,487,487 2,682,554,495 ------------ ------------ -------------- Liabilities: Payable for outstanding purchases 3,213,981 Accrued expenses and other payables 1,766,653 ------------ ------------ -------------- Total liabilities - - 4,980,634 ------------ ------------ -------------- Net assets available for plan benefits $104,583,449 $118,487,487 $2,677,573,861 ============ ============ ============== *Represents more than 5% of net assets available for plan benefits
17 I. Fund Data, Continued: The following is a summary of changes in net assets available for plan benefits by fund for the year ended December 31, 1998: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Blue Chip Fund Fund Stock Fund Fund Fund Fund Fund Additions to net assets attributable to: Investment income: Net appreciation of investments $ 7,968 $ 39,869,117 $ 46,093,769 $116,015,605 $ 8,737,847 $ 23,704,822 $ 35,513,033 Interest & Dividends 52,236,404 40,677,644 487 11,799,209 5,735,292 7,005,152 ----------- ------------ ------------ ------------ ------------ ------------ ------------ 52,244,372 80,546,761 46,094,256 116,015,605 20,537,056 29,440,114 42,518,185 ----------- ------------ ------------ ------------ ------------ ------------ ------------ Contributions and deferrals: Employee deferrals 34,393,979 30,611,637 19,742,509 24,215,193 7,352,853 10,245,680 12,699,583 Employer contributions 9,772,937 9,247,861 6,058,288 7,160,853 2,130,456 2,735,723 3,461,156 Transfers 688,904 433,952 390,442 81,659 292,867 ------------ ------------ ------------ ----------- ------------ ------------ ------------ 44,855,820 40,293,450 25,800,797 31,766,488 9,564,968 13,274,270 16,160,739 ------------ ------------ ------------ ------------ ------------ ------------ ------------ Total additions 97,100,192 120,840,211 71,895,053 147,782,093 30,102,024 42,714,384 58,678,924 ------------ ------------ ------------ ------------ ------------ ------------ ------------ Deductions from net assets attributable to: Distributions to participants 92,915,405 47,496,188 20,966,864 29,985,617 7,923,978 6,806,225 8,887,855 Administrative expenses 68,305 61,171 34,400 37,925 9,103 7,397 10,413 Transfers 9,832,382 6,519,835 3,644,315 4,904,260 1,139,553 1,464,607 1,785,711 ------------ ------------ ----------- ------------- ------------ ------------ ------------ Total deductions 102,816,092 54,077,194 24,645,579 34,927,802 9,072,634 8,278,229 10,683,979 ------------ ------------ ----------- ------------- ------------ ------------ ------------ Interfund transfers 90,500,726 (78,365,183) (68,957,709) (5,011,707) 5,689,819 26,916,689 38,670,396 ------------ ------------ ----------- ------------- ------------ ------------ ------------ Increase(decrease) in net assets 84,784,826 (11,602,166) (21,708,235) 107,842,584 26,719,209 61,352,844 86,665,341 Net assets, beginning of year 780,065,182 702,811,931 383,748,432 414,280,870 99,624,204 73,972,306 104,583,449 ------------ ------------ ----------- ------------ ------------ ------------ ------------ Net assets, end of year $864,850,008 $691,209,765 $362,040,197 $522,123,454 $126,343,413 $135,325,150 $191,248,790 ============ ============ ============ ============ ============ ============ ============
18 Templeton Retirement Vanguard Vanguard TRP Foreign I Money Winsor Wellesley Cap Stock Fund Market Fund Fund Fund Fund Assets: Additions to net assets attributable to: Investment income: Net appreciation of investments $ $ 2,864,378 $ 1,379,950 $ 15 Interest & Dividends - $ 1,231 ---------- ------------ ----------- ----------- --------- - 1,231 2,864,378 1,379,950 15 ---------- ------------ ----------- ----------- --------- Contributions and deferrals: Employee deferrals 32 18 18 191 Employer contributions 20 22 142 Transfers 10,958 (2,864,377) (1,379,950) ------------ ------------ ----------- ----------- --------- 52 10,958 (2,864,337) (1,379,932) 333 ------------ ------------ ----------- ----------- --------- Total additions 52 12,189 41 18 348 ------------ ------------ ----------- ----------- --------- Deductions from net assets attributable to: Distributions to participants (84) Administrative expenses Transfers ------------ ------------ ----------- ----------- --------- Total deductions - (84) - - - ------------ ------------ ----------- ----------- --------- Interfund transfers 69,922 ------------ ------------ ----------- ----------- --------- Increase/(Decrease) in net assets 52 82,195 41 18 348 Net assets, beginning of year ------------ ------------ ----------- ------------- --------- Net assets, end of year $ 52 $ 82,195 $ 41 $ 18 $ 348 ============ ============ =========== ============= =========
19 Loan Fund Other(1) Total Additions to net assets attributable to: Investment income: Net appreciation of investments $ 274,186,504 Interest & Dividends $ 8,059,334 125,514,753 ------------ ------------- -------------- 8,059,334 399,701,257 ------------ ------------- -------------- Contributions and deferrals: Employee deferrals 139,261,693 Employer contributions 40,567,458 Transfers 21,593,888 $3,824,865,272 3,844,113,615 ----------- -------------- -------------- 21,593,888 3,824,865,272 4,023,942,766 ----------- ------------- -------------- Total additions 29,653,222 3,824,865,272 4,423,644,023 ----------- -------------- -------------- Deductions from net assets attributable to: Distributions to participants 11,253,517 226,235,565 Administrative expenses 228,714 Transfers 29,290,663 ------------ -------------- -------------- Total deductions 11,253,517 - 255,754,942 ------------ -------------- -------------- Interfund transfers (9,512,953) ------------ -------------- -------------- Increase/(Decrease) in net assets 8,886,752 3,824,865,272 4,167,889,081 Net assets, beginning of year 118,487,487 2,677,573,861 ------------ -------------- -------------- Net assets, end of year $127,374,239 $3,824,865,272 $6,845,462,942 ============ ============== ============= (1) See Note H
20 J. Master Trust: All plan investments are included under the Master Trust. At December 31, 1998, assets of the Plan represented 95.9% of the total assets under the Master Trust. This has decreased from 76.2% at December 31, 1997. The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1998: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $ 473,258,791 Prudential Life Insurance Company of America 236,989,116 Metropolitan Life Insurance Company* 594,847,154 Fidelity 25,803,449 Connecticut General 6,538,482 Monumental Life Insurance Company 6,869,338 At fair value: Fidelity Equity Income Fund* $1,464,615,296 Raytheon Company Common Stock Fund* $ 799,542,751 BT Pyramid Equity Index Fund* $ 745,602,791 Fidelity Balanced Fund* $ 442,796,289 Fidelity Magellan Fund* $ 379,680,454 Fidelity Blue Chip Fund* Templeton Foreign I Fund Fidelity Investment Grade Bond Fund Fidelity Retirement Money Market Vanguard Winsor Vanguard Wellesley TRP Small Cap Stock Raytheon Class A Wasting Stock Fund Raytheon GMH Wasting Stock Fund Loans receivable from participants -------------- -------------- -------------- -------------- -------------- -------------- Total investments 1,344,306,330 1,464,615,296 799,542,751 745,602,791 442,796,289 379,680,454 -------------- -------------- -------------- -------------- -------------- -------------- Receivables: Employer contribution Accrued investment income and other receivables 4,748,948 1,573,604 Transfer receivables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803 Cash and cash equivalents 123,969,201 11,004,025 3,330,147 -------------- -------------- -------------- -------------- -------------- -------------- Total assets 2,048,537,201 2,226,757,712 1,255,380,751 967,248,229 755,173,618 616,369,257 -------------- -------------- -------------- -------------- -------------- -------------- Liabilities: Payable for outstanding purchases 1,932,125 Accrued expenses and other payables 1,853,618 844,977 Transfer payables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803 -------------- -------------- -------------- -------------- -------------- -------------- Total liabilities 580,261,670 762,142,416 443,870,770 217,586,664 312,377,329 236,688,803 -------------- -------------- -------------- -------------- -------------- -------------- Net assets available for plan benefits $1,468,275,531 $1,464,615,296 $ 811,509,981 $ 749,661,565 $ 442,796,289 $ 379,680,454 ============== ============== ============== ============== ============== ==============
21 Templeton Investment Retirement Vanguard Vanguard Blue Chip Foreign I Grade Money Winsor Wellesley Fund Fund Bond Fund Market Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* Prudential Life Insurance Company of America Metropolitan Life Insurance Company* Fidelity Connecticut General Monumental Life Insurance Company At fair value: Fidelity Equity Income Fund* Raytheon Company Common Stock Fund* BT Pyramid Equity Index Fund* Fidelity Balanced Fund* Fidelity Magellan Fund* Fidelity Blue Chip Fund* $ 391,787,509 Templeton Foreign I Fund $ 6,966,704 Fidelity Investment Grade Bond Fund $ - Fidelity Retirement Money Market $ 13,202,524 Vanguard Winsor $ 41 Vanguard Wellesley $ 18 TRP Small Cap Stock Raytheon Class A Wasting Stock Fund Raytheon GMH Wasting Stock Fund Loans receivable from participants -------------- -------------- -------------- ------------- ------------- -------------- Total investments 391,787,509 6,966,704 - 13,202,524 41 18 -------------- -------------- -------------- ------------- ------------- -------------- Receivables: Employer contribution 3,595,261 Accrued investment income and other receivables Transfer receivables 191,269,141 6,966,652 16,715,590 Cash and cash equivalents -------------- -------------- -------------- ------------- ------------- -------------- Total assets 583,056,650 13,933,356 - 33,513,375 41 18 -------------- -------------- -------------- ------------- ------------- -------------- Liabilities: Payable for outstanding purchases Accrued expenses and other payables Transfer payables 191,269,141 6,966,652 16,715,590 -------------- -------------- -------------- ------------- ------------- -------------- Total liabilities 191,269,141 6,966,652 - 16,715,590 - - -------------- -------------- -------------- ------------- ------------- -------------- Net assets available for plan benefits $ 391,787,509 $ 6,966,704 $ - $ 16,797,785 $ 41 $ 18 ============== ============== ============== ============== ============== ==============
22 TRP Small RTN.A GMH Cap Stock Wasting Wasting Loan Fund Fund Fund Fund Other(1) Total Assets: Investments: At contract value: Bankers Trust* $ 473,258,791 Prudential Life Insurance Company of America 236,989,116 Metropolitan Life Insurance Company* 594,847,154 Fidelity 25,803,449 Connecticut General 6,538,482 Monumental Life Insurance Company 6,869,338 At fair value: Fidelity Equity Income Fund* 1,464,615,296 Raytheon Company Common Stock Fund* 799,542,751 BT Pyramid Equity Index Fund* 745,602,791 Fidelity Balanced Fund* 442,796,289 Fidelity Magellan Fund* 379,680,454 Fidelity Blue Chip Fund* 391,787,509 Templeton Foreign I Fund 6,966,704 Fidelity Investment Grade Bond Fund - Fidelity Retirement Money Market 13,202,524 Vanguard Winsor 41 Vanguard Wellesley 18 TRP Small Cap Stock $ 348 348 Raytheon Class A Wasting Stock Fund $ 116,129,149 116,129,149 Raytheon GMH Wasting Stock Fund $ 172,859,819 172,859,819 Loans receivable from participants $ 250,687,865 250,687,865 -------------- -------------- -------------- -------------- ------------- -------------- Total investments 348 116,129,149 172,859,819 250,687,865 - 6,128,177,888 -------------- -------------- -------------- -------------- ------------- -------------- Receivables: Employer contribution 3,595,261 Accrued investment income and other receivables 1,193,397 23,640 7,539,589 Transfer receivables 120,761,325 178,295,618 117,046,618 $ 855,826,675 4,035,178,551 Cash and cash equivalents 3,480,490 5,474,220 147,258,083 -------------- -------------- -------------- ------------- -------------- -------------- Total assets 348 241,564,361 356,653,297 367,734,483 855,826,675 10,321,749,372 -------------- -------------- -------------- ------------- -------------- -------------- Liabilities: Payable for outstanding purchases 1,932,125 Accrued expenses and other payables 41,711 62,061 2,802,367 Transfer payables 120,761,325 178,295,618 117,046,618 3,179,351,876 -------------- -------------- -------------- ------------- -------------- -------------- Total liabilities - 120,803,036 178,357,679 117,046,618 - 3,184,086,368 -------------- -------------- -------------- ------------- -------------- -------------- Net assets available for plan benefits $ 348 $120,761,325 $ 178,295,618 $ 250,687,865 $ 855,826,675 $7,137,663,004 ============== ============== ============== ============== ============== ============== Percentage of Master Trust that are Plan assets - 95.9% *Represent more than 5% of net assets available for plan benefits (1) Other represents Raytheon plans merging in from outside the Master Trust. Note: Not all funds within the Master Trust are available options to participants in the Plan.
23 J. Master Trust, Continued: The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1997: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $351,035,073 Prudential Life Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* $782,799,011 Raytheon Company Common Stock Fund* $745,980,294 BT Pyramid Equity Index Fund* $484,781,406 Fidelity Balanced Fund $117,556,481 Fidelity Magellan Fund $91,863,155 Fidelity Blue Chip Fund Templeton Foreign I Fund Fidelity Investment Grade Bond Fund Fidelity Retirement Money Market Fund Loans receivable from participants ------------ ------------ ------------ ------------ ------------ ----------- Total investments 939,889,852 782,799,011 745,980,294 484,781,406 117,556,481 91,863,155 ------------ ------------ ------------ ------------ ------------ ----------- Receivables: Employer contribution Accrued investment income and other receivables 5,489,592 1,161,112 Cash and cash equivalents 9,232,100 13,498,051 4,761,268 ------------ ------------ ------------ ------------ ------------ ----------- Total assets 949,121,952 782,799,011 764,967,937 490,703,786 117,556,481 91,863,155 ------------ ------------ ------------ ------------ ------------ ----------- Liabilities: Payable for outstanding purchases 6,340,318 Accrued expenses and other payables 1,480,875 1,200,471 ------------- ------------ ------------ ------------ ------------ ----------- Total liabilities - - 7,821,193 1,200,471 - - ------------- ------------ ------------ ------------ ------------ ----------- Net assets available for plan benefits $949,121,952 $782,799,011 $757,146,744 $489,503,315 $117,556,481 $91,863,155 ============ ============ ============ ============ ============ ===========
24 Templeton Investment Retirement Blue Chip Foreign I Grade Money Loan Fund Fund Bond Fund Market Fund Fund Total Assets: Investments: At contract value: Bankers Trust* $351,035,073 Prudential Life Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* 782,799,011 Raytheon Company Common Stock Fund* 745,980,294 BT Pyramid Equity Index Fund* 484,781,406 Fidelity Balanced Fund 117,556,481 Fidelity Magellan Fund 91,863,155 Fidelity Blue Chip Fund $136,586,123 136,586,123 Templeton Foreign I Fund $5,471,176 5,471,176 Fidelity Investment Grade Bond Fund $1,548,125 1,548,125 Fidelity Retirement Money Market Fund $12,186,085 12,186,085 Loans receivable from participants $166,395,767 166,395,767 ------------ ---------- ---------- ----------- ------------ ------------- Total investments 136,586,123 5,471,176 1,548,125 12,186,085 166,395,767 3,485,057,475 ------------ ---------- ---------- ----------- ------------ -------------- Receivables: Employer contribution 4,015,100 4,015,100 Accrued investment income and other receivables 6,650,704 Cash and cash equivalents 27,491,419 ------------ ---------- ---------- ----------- ------------ -------------- Total assets 136,586,123 5,471,176 1,548,125 16,201,185 166,395,767 3,523,214,698 ------------ ---------- ---------- ----------- ------------ -------------- Liabilities: Payable for outstanding purchases 6,340,318 Accrued expenses and other payables 2,681,346 ------------ ---------- ---------- ----------- ------------ -------------- Total liabilities - - - - - 9,021,664 ------------ ---------- ---------- ----------- ------------ -------------- Net assets available for plan benefits $136,586,123 $5,471,176 $1,548,125 $16,201,185 $166,395,767 $3,514,193,034 ============ ========== ========== =========== ============ ============== Percentage of Master Trust that are plan assets - 76.2% *Represent more than 5% of net assets available for plan benefits Note: Not all funds within the Master Trust are available options to participants in the Plan.
25 J. Master Trust, Continued: The following is a summary of investment income by fund under the Master Trust for the year ended December 31, 1998: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Investment income: Net appreciation (depreciation) of assets $ 30,695 $ 49,019,748 $74,202,083 $149,571,006 $16,091,158 $62,195,801 Interest & Dividends 81,886,632 86,279,682 1,792 42,537,357 13,255,763 ----------- ------------ ----------- ------------ ----------- ----------- Total investment income/(loss) $81,917,327 $135,299,430 $74,203,875 $149,571,006 $58,628,515 $75,451,564 =========== ============ =========== ============ =========== ===========
26 Templeton Investment Retirement Vanguard Vanguard Blue Chip Foreign I Grade Money Winsor Wellesley Fund Fund Bond Fund Market Fund Fund Fund Investment income: Net appreciation (depreciation) of assets $60,264,181 $(1,095,980) $ 17,635 $2,864,378 $1,379,950 Interest & Dividends 13,550,491 752,610 162,858 $ 349,740 ----------- ----------- -------- ---------- ---------- ---------- Total investment income/(loss) $73,814,672 $ (343,370) $180,493 $ 349,740 $2,864,378 $1,379,950 =========== =========== ======== ========== ========== ==========
27 TRP Small RTN.A GMH Cap Stock Wasting Wasting Loan Fund Fund Fund Fund Total Investment income: Net appreciation (depreciation) of assets $ 15 $ (35,268) $44,604,025 $459,109,427 Interest & Dividends $15,334,403 254,111,328 ----------- ---------- ----------- ----------- ------------ Total investment income/(loss) $ 15 $ (35,268) $44,604,025 $15,334,403 $713,220,755 =========== ========== =========== =========== ============
1 EXHIBIT 99.1a CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (File No. 333-56117) of Raytheon Company of our report dated June 4, 1999 relating to the financial statements of the Raytheon Savings and Investment Plan, which appears in this Form 10-K/A. PricewaterhouseCoopers LLP Boston, Massachusetts June 29, 1999
1 EXHIBIT 99.6 RAYTHEON TI SYSTEMS SAVINGS PLAN FINANCIAL STATEMENTS TO ACCOMPANY 1998 FORM 5500 ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN UNDER ERISA OF 1974 FOR THE YEAR ENDED DECEMBER 31, 1998 The supplemental schedules to the Plan's Form 5500 are not required since the Plan's assets are held in a Master Trust. Accordingly, the Plan administrator must file detailed financial information, including the supplemental schedules, separately with the Department of Labor.
2 REPORT OF INDEPENDENT ACCOUNTANTS To the Participants and Administrator of the Raytheon TI Systems Savings Plan: In our opinion, the accompanying statements of net assets available for plan benefits and the related statement of changes in net assets available for plan benefits present fairly, in all material respects, the net assets available for benefits of the Raytheon TI Systems Savings Plan (the "Plan") at December 31, 1998 and 1997, and the changes in net assets available for benefits for the year ended December 31, 1998 in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. As discussed in Notes A and H to the financial statements, the Board of Directors of Raytheon Company voted on December 16, 1998, to merge the Plan into the Raytheon Savings and Investment Plan. PricewaterhouseCoopers LLP Boston, Massachusetts June 4, 1999
3 RAYTHEON TI SYSTEMS SAVINGS PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS as of December 31, 1998 and 1997 1998 1997 Assets: Master trust investments: At contract value (Notes B, E and I) $ 36,008,015 $ 27,129,250 At fair value (Notes B, F and I) 215,389,507 151,647,372 ------------ ------------ 251,397,522 178,776,622 ------------ ------------ Receivables: Accrued investment income and other receivables 422,047 528,072 Cash and cash equivalents 4,278,946 1,673,631 ------------ ------------ Total assets 256,098,515 180,978,325 ------------ ------------ Liabilities: Payable for outstanding purchases 132,047 533,996 Accrued expenses and other payables 179,030 192,678 Transfer payables (Note H) 255,787,438 ------------ ------------ Total liabilities 256,098,515 726,674 ------------ ------------ Net assets available for plan benefits $ - $180,251,651 ============ ============ The accompanying notes are an integral part of the financial statements.
4 RAYTHEON TI SYSTEMS SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS for the year ended December 31, 1998 Additions to net assets attributable to: Investment income (Notes B, E and I): Net appreciation of investments $ 25,229,092 Interest & Dividends 8,294,811 ------------ 33,523,903 Contributions and deferrals: Employee deferrals 43,369,679 Employer contributions 8,443,415 Transfers (Note G) 32,797 ------------ 51,845,891 Total additions 85,369,794 ------------ Deductions from net assets attributable to: Distributions to participants 9,757,925 Administrative expenses 16,103 Transfers (Note G and H) 255,847,417 ------------ Total deductions 265,621,445 ------------ Decrease in net assets (180,251,651) Net assets, beginning of year 180,251,651 ------------ Net assets, end of year $ - ============ The accompanying notes are an integral part of the financial statements.
5 RAYTHEON TI SYSTEMS SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS A. Description of Plan: General As more fully described in Note H, the Raytheon TI Systems Savings Plan (the "Plan") ceased to exist as of December 31, 1998 and effective January 1, 1999, was merged into the Raytheon Savings and Investment Plan (RAYSIP). The following description of the Plan provides only general information that is applicable through December 31, 1998. Participants should refer to the plan document for a complete description of the Plan's provisions. The Plan was established on July 11, 1997 for former employees of Texas Instruments. The Plan is a defined contribution plan covering certain employees of Raytheon Company (the "Company"). An employee becomes eligible to participate in the Plan on the date he or she becomes an employee and may enter the Plan any day thereafter during his or her employment. The purpose of the Plan is to provide participants with a tax-effective means of meeting both short and long-term investment objectives. The Plan is intended to be a "qualified cash or deferred arrangement" under the Internal Revenue Code (the "Code"). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan's investments are combined with the investments of other similar defined contribution plans of the Company into the Raytheon Company Master Trust for Defined Contribution Plans ("Master Trust"). The trustee of the Master Trust maintains a separate account reflecting the equitable share in the Trust of each plan. Investment income and administrative expenses relating to the Master Trust are allocated to the individual plans based upon average monthly balances invested by each plan. Contributions and Deferrals Eligible employees are allowed to defer to the Plan up to 17% of their salaries. The Company contributes amounts equal to 50% of each participant's deferral, up to a maximum of 2% of the participant's salary. For 1998, the annual employee deferral for a participant cannot exceed $10,000. Rollover contributions from other qualified plans are accepted by the Plan. Participants may invest their deferrals in any combination of nine funds: (a) a Fixed Income Fund under which assets are invested primarily in contracts providing for fixed rates of interest for specified periods of time, (b) the Fidelity Equity Income Fund which invests in shares of a mutual fund consisting primarily of income-producing equity securities, (c) a Raytheon Common Stock Fund which invests in shares of Raytheon Company common stock, (d) a Stock Index Fund which invests in a commingled pool consisting primarily of equity securities and is designed to track the S&P 500 Index, (e) the Fidelity Balanced Fund which invests
6 in shares of a mutual fund consisting primarily of equity securities, bonds and money market instruments, (f) the Fidelity Magellan Fund, a growth fund which invests primarily in equities of companies of all types and sizes, (g) the Fidelity Blue Chip Fund, a growth fund which invests primarily in equities of well known and established companies, (h) the Templeton Foreign I Fund, a long-term capital growth fund which invests in stocks and debt obligations of companies and governments of any nation and (i) the Fidelity Investment Grade Bond Fund which invests primarily in U.S. government and corporate bonds including, without limitation, index funds and mutual funds. The Fidelity Investment Grade Bond Fund was eliminated as an option during 1998 and balances were transferred into the Fixed Income Fund. Dividends and distributions from investments of the Fidelity Equity Income Fund, the Raytheon Common Stock Fund, the Stock Index Fund, the Fidelity Balanced Fund, the Fidelity Magellan Fund, the Fidelity Blue Chip Fund, the Templeton Foreign I Fund and the Fidelity Investment Grade Bond Fund are reinvested in their respective funds; stock dividends, stock splits and similar changes are also reflected in the funds. Participant Accounts Each participant's account is credited with the participant's deferral, the Company's contribution and an allocation of plan earnings. Plan earnings are allocated based on account balances by fund. Vesting Participants are fully and immediately vested in their entire account balance including voluntary deferrals, employer contributions and all investment earnings thereon. Distributions to Participants A participant may withdraw all or a portion of deferrals, employer contributions and related earnings upon attainment of age 59 1/2. For reasons of financial hardship, as defined in the plan document, a participant may withdraw all or a portion of deferrals. On termination of employment, a participant will receive a lump-sum distribution unless the vested account is valued in excess of $3,500 and the participant elects to defer distribution. A retiree or a beneficiary of a deceased participant may defer the distribution until January of the year following attainment of age 65. Loans to Participants A participant may borrow against a portion of the balance in the participant's account, subject to certain restrictions. The maximum amount of a loan is the lesser of one-half of the participant's vested account balance or $50,000. The minimum loan which may be granted is $500. The interest rate applied is equal to the prime rate published in the Wall Street Journal on the first business day in June and December of each year. Loans must be repaid over a period of up to five years by means of payroll deductions. In certain cases, the repayment period may be extended up to 15 years. Interest paid to the Plan on loans to participants is credited to the borrower's account in the investment fund to which repayments are made.
7 Administrative Expenses Substantially all expenses of administering the Plan are paid by the plan participants. B. Summary of Significant Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting. The Plan's investment contracts are fully benefit-responsive and are therefore included in the financial statements at their contract value, defined as net contributions and deferrals plus interest earned on the underlying investments at contracted rates. Contract value approximates fair value. Investments in mutual funds and the commingled pool are valued at the closing net asset value reported on the last business day of the year. Investments in securities (common stocks) traded on a national securities exchange are valued at the last reported sales price on the last business day of the year. Cash equivalents are short-term money market instruments and are valued at cost, which approximates fair value. Participant loans are valued at cost, which approximates fair value. Security transactions are recorded on the trade date. Except for its investment contracts (Note E), the Plan's investments are held by bank-administered trust funds. Payables for outstanding security transactions represent trades which have occurred but have not yet settled. The Plan presents in the statement of changes in net assets the net appreciation (depreciation) in the fair value of its investments which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. Dividend income is recorded on the ex-dividend date. Income from other investments is recorded as earned on an accrual basis. Investment income includes both dividends and interest income. Benefits are recorded when paid. The preparation of the financial statements in conformity with generally accepted accounting principles requires the Plan administrator to make significant estimates and assumptions that affect the reported amounts of net assets and liabilities available for benefits at the date of the financial statements and the changes in net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from the estimates included in the financial statements.
8 The Plan provides for various investment options in any combination of stocks, bonds, fixed income securities, mutual funds and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the statement of net assets available for plan benefits and the statement of changes in net assets available for plan benefits. C. Federal Income Tax Status: The Internal Revenue Service has determined and informed the Company by letter dated March 1999 that the Plan, as adopted on July 11, 1997, and related trust are designed in accordance with applicable sections of the Code. The Plan has been amended since applying for the determination letter. However, the Plan administrator and the Plan's legal counsel believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the Code. Therefore, no provision for income taxes has been included in the Plan's financial statements. D. Plan Termination: Although it has not expressed any intention to do so, the Company reserves the right under the Plan at any time or times to discontinue its contributions and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, plan assets shall be distributed among all participants in proportion to their interest and employee contributions shall be distributed in accordance with the provisions contained in the Code. E. Investment Contracts: The Plan invests in collateralized fixed income investment portfolios which are managed by insurance companies and investment management firms. The credited interest rates are adjusted semiannually to reflect the experienced and anticipated yields to be earned on such investments, based on their book value. The annualized average yield and credited interest rates were as follows:
9 Annualized Credited Average Yield Interest Rate For the year ended December 31, 1998: Banker's Trust (WBS 92-485) 6.85% 6.85% Metropolitan Life Insurance Company (GIC GA-12908) 6.58% 6.58% Metropolitan Life Insurance Company (GIC GA-13659) 6.10% 6.10% Prudential Asset Management Company (GIC 917163-001) 6.75% 6.75% Connecticut General (GIC 0025174) 5.58% 5.58% Fidelity IPL (633-GCDC) 5.62% 5.62% Monumental Life Insurance Company (GIC BDA00463FR-00) 7.84% 7.84% For the year ended December 31, 1997: Banker's Trust (WBS 92-485) 6.95% 6.95% Metropolitan Life Insurance Company (GIC GA-12908) 6.86% 6.86% Metropolitan Life Insurance Company (GIC GA-13659) 6.43% 6.43% Prudential Asset Management Company (GIC 917163-001) 6.99% 6.99% The contract values are subject to limitations in certain situations including large workforce reductions and plan termination. In the financial statements the two Metropolitan Life Insurance Company contracts are recorded as one investment option. F. Related Party Transactions: The Plan's trustee is Fidelity Management Trust Company (the "Trustee"). The Trustee holds the funds for the Plan and is responsible for managing the Plan's investment assets, executing all investment transactions, recording approved transactions, and, therefore these transactions qualify as party-in-interest. In accordance with the provisions of the Plan, the Trustee acts as the Plan's agent for purchases and sales of shares of Raytheon Company common stock. These transactions are performed on a Master Trust level. For the Master Trust, purchases amounted to $288,116,995 and sales amounted to $257,878,566 for the year ended December 31, 1998. G. Transfers: Transfers include transfers of participant accounts, individually and/or in-groups, between the Plan and other plans included in the Raytheon Company Master Trust for those participants, and/or groups of participants, who changed plans during the year. Transfers also include transfers of participant accounts, individually and/or in-groups, between the Plan and similar savings plans of other companies for those participants who changed companies during the year. H. Transfer Payables: As part of an overall effort to minimize plan design differences and increase administrative efficiencies, the Board of Directors of Raytheon Company voted on December 16, 1998 to merge the participants and their account balances into the RAYSIP. The Plan ceased to exist on December 31, 1998 and effective January 1, 1999, the plan provisions of the RAYSIP govern. The transfer payable amount represents a complete transfer of assets to the RAYSIP.
10 I. Fund Data: The following is a summary of net assets available for plan benefits by fund as of December 31, 1998: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Blue Chip Fund Fund Stock Fund Fund Fund Fund Fund Assets: Master trust investments: At contract value: Bankers Trust $ 12,676,508 Prudential Life Insurance Company of America 6,347,889 Metropolitan Life Insurance Company 15,933,322 Fidelity 691,160 Connecticut General 175,137 Monumental Life Insurance Company 183,999 At fair value: Fidelity Equity Income Fund $ 17,276,885 Raytheon Company Common Stock Fund $54,644,741 BT Pyramid Equity Index Fund $46,192,796 Fidelity Balanced Fund $13,627,478 Fidelity Magellan Fund $19,552,160 Chip Fund $41,109,867 Templeton Foreign I Fund Loans receivable from participants ------------ ----------- ----------- ----------- ----------- ----------- ----------- Total investments 36,008,015 17,276,885 54,644,741 46,192,796 13,627,478 19,552,160 41,109,867 ------------ ----------- ----------- ----------- ----------- ----------- ----------- Receivables: Accrued investment income and other receivables 324,556 97,491 Cash and cash equivalents 3,320,586 752,045 206,315 ------------ ----------- ----------- ----------- ----------- ----------- ----------- Total assets 39,328,601 17,276,885 55,721,342 46,496,602 13,627,478 19,552,160 41,109,867 ------------ ----------- ----------- ----------- ----------- ----------- ----------- Liabilities: Payable for outstanding purchases 132,047 Accrued expenses and other payables 126,681 52,349 Transfer payables 39,328,601 17,276,885 55,462,614 46,444,253 13,627,478 19,552,160 41,109,867 ------------ ----------- ----------- ----------- ----------- ----------- ----------- Total liabilities 39,328,601 17,276,885 55,721,342 46,496,602 13,627,478 19,552,160 41,109,867 ------------ ----------- ----------- ----------- ----------- ----------- ----------- Net assets available for plan benefits $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 ============ =========== =========== ========== =========== =========== ===========
11 Templeton Foreign I Loan Account Fund Total Assets: Master trust investments: At contract value: Bankers Trust $ 12,676,508 Prudential Insurance Company of America 6,347,889 Metropolitan Life Insurance Company 15,933,322 Fidelity 691,160 Connecticut General 175,137 Monumental Life Insurance Company 183,999 At fair value: Fidelity Equity Income Fund 17,276,885 Raytheon Company Common Stock Fund 54,644,741 BT Pyramid Equity Index Fund 46,192,796 Fidelity Balanced Fund 13,627,478 Fidelity Magellan Fund 19,552,160 Fidelity Blue Chip Fund 41,109,867 Templeton Foreign I Fund $ 6,966,650 6,966,650 Loans receivable from participants $16,018,930 16,018,930 ----------- ----------- ------------ Total investments 6,966,650 16,018,930 251,397,522 ----------- ----------- ------------ Receivables: Accrued investment income and other receivables 422,047 Cash and cash equivalents 4,278,946 ----------- ----------- ------------ Total assets 6,966,650 16,018,930 256,098,515 ----------- ----------- ------------ Liabilities: Payable for outstanding purchases 132,047 Accrued expenses and other payables 179,030 Transfer payables 6,966,650 16,018,930 255,787,438 ----------- ----------- ------------ Total liabilities 6,966,650 16,018,930 256,098,515 ----------- ----------- ------------ Net assets available for plan benefits $ 0 $ 0 $ 0 =========== =========== ============
12 I. Fund Data, Continued: The following is a summary of net assets available for plan benefits by fund as of December 31, 1997: Raytheon Fixed Equity Common Stock Balanced Magellan Income Fund Fund Stock Fund Index Fund Fund Fund 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
13 Templeton Investment Blue Chip Foreign I Grade Loan Fund Fund Bond Fund Fund Total Assets: Investments: At contract value: Bankers Trust* $ 10,132,377 Prudential Life Insurance Company of America 6,284,670 Metropolitan Life Insurance Company* 10,712,203 At fair value: Fidelity Equity Income Fund 8,254,100 Raytheon Company Common Stock Fund* 62,818,459 BT Pyramid Equity Index Fund* 27,442,258 Fidelity Balanced Fund 7,638,642 Fidelity Magellan Fund 6,635,153 Fidelity Blue Chip Fund* $ 18,760,639 18,760,639 Templeton Foreign I Fund $5,471,176 5,471,176 Fidelity Investment Grade Bond Fund $1,548,125 1,548,125 Loans receivable from participants* $ 13,078,820 13,078,820 ------------ ---------- ---------- ------------ ------------ Total investments 18,760,639 5,471,176 1,548,125 13,078,820 178,776,622 ------------ ---------- ---------- ------------ ------------ Receivables: Accrued investment income and other receivables 528,072 Cash and cash equivalents 1,673,631 ------------ ---------- ---------- ------------ ------------ Total assets 18,760,639 5,471,176 1,548,125 13,078,820 180,978,325 ------------ ---------- ---------- ------------ ------------ Liabilities: Payable for outstanding purchases 533,996 Accrued expenses and other payables 192,678 ------------ ---------- ---------- ------------ ------------ Total liabilities - - - - 726,674 ------------ ---------- ---------- ------------ ------------ Net assets available for plan benefits $ 18,760,639 $5,471,176 $1,548,125 $ 13,078,820 $180,251,651 ============ ========== ========== ============ ============ *Represent more than 5% of net assets available for plan benefits
14 I. Fund Data, Continued: The following is a summary of changes in net assets available for plan benefits by fund for the year ended December 31, 1998: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Blue Chip Fund Fund Stock Fund Fund Fund Fund Fund Additions to net assets attributable to: Investment income: Net appreciation (depreciation) of investments $ 3,295 $ 584,690 $ 5,158,554 $ 9,280,287 $ 829,007 $ 3,117,037 $ 7,334,555 Interest & Dividends 1,993,246 874,982 1,116,139 717,602 1,421,709 ----------- ------------ ----------- ----------- ----------- ------------ ------------ 1,996,541 1,459,672 5,158,554 9,280,287 1,945,146 3,834,639 8,756,264 ----------- ------------ ----------- ----------- ----------- ------------ ------------ Contributions and deferrals: Employee deferrals 6,104,144 5,975,544 3,061,022 7,954,043 2,632,497 5,181,263 8,707,144 Employer contributions 1,130,391 1,217,093 659,688 1,608,662 479,166 944,884 1,701,689 Transfers 14,206 42,771 3,898 (12,411) (1,814) (1,765) ------------ ------------ ----------- ----------- ----------- ------------ ------------ 7,248,741 7,235,408 3,724,608 9,550,294 3,111,663 6,124,333 10,407,068 ------------ ------------ ----------- ----------- ----------- ------------ ------------ Total additions 9,245,282 8,695,080 8,883,162 18,830,581 5,056,809 9,958,972 19,163,332 ------------ ------------ ----------- ----------- ----------- ------------ ------------ Deductions from net assets attributable to: Distributions to participants 1,860,825 745,470 1,703,163 1,536,525 675,276 535,393 1,528,144 Administrative expenses 2,492 940 5,698 2,756 767 764 1,998 Transfers (13,295) 27,074 62,761 Transfers plan mergers 39,328,602 17,276,885 55,462,614 46,444,253 13,627,478 19,552,160 41,109,867 ------------ ------------ ----------- ------------ ----------- ------------ ------------ Total deductions 41,191,919 18,010,000 57,198,549 48,046,295 14,303,521 20,088,317 42,640,009 ------------ ------------ ----------- ------------ ----------- ------------ ------------ Interfund transfers 4,550,112 1,060,820 (15,443,534) 1,506,164 1,608,070 3,494,192 4,716,038 ------------ ------------ ----------- ------------ ----------- ------------ ------------ Decrease in net assets (27,396,525) (8,254,100) (63,758,921) (27,709,550) (7,638,642) (6,635,153) (18,760,639) Net assets, beginning of year 27,396,525 8,254,100 63,758,921 27,709,550 7,638,642 6,635,153 18,760,639 ------------ ------------ ----------- ----------- ------------ ------------ ------------ Net assets, end of year $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 ============ ============ =========== =========== ============ ============ ============
15 Templeton Investment Foreign I Grade Bond Loan Fund Fund Fund Total Additions to net assets attributable to: Investment income: Net appreciation (depreciation) of investments $(1,095,967) $ 17,634 $ 25,229,092 Interest & Dividends 752,610 162,858 $ 1,255,665 8,294,811 ----------- ------------ ------------ ------------- (343,357) 180,492 1,255,665 33,523,903 ----------- ------------ ------------- ------------- Contributions and deferrals: Employee deferrals 2,897,062 856,960 43,369,679 Employer contributions 598,350 103,492 8,443,415 Transfers (12,088) 32,797 ---------- ------------ ------------- ------------- 3,495,412 960,452 (12,088) 51,845,891 ----------- ------------ ------------- ------------- Total additions 3,152,055 1,140,944 1,243,577 85,369,794 ----------- ------------ ------------- ------------- Deductions from net assets attributable to: Distributions to participants 274,069 123,832 775,228 9,757,925 Administrative expenses 514 174 16,103 Transfers (16,562) 59,978 Transfers plan mergers 6,966,650 16,018,930 255,787,439 ----------- ------------ -------------- ------------- Total deductions 7,241,233 124,006 16,777,596 265,621,445 ----------- ------------ -------------- ------------- Interfund transfers (1,381,998) (2,565,063) 2,455,199 ----------- ----------- -------------- ------------- Decrease in net assets (5,471,176) (1,548,125) (13,078,820) (180,251,651) ----------- ----------- -------------- ------------- Net assets, beginning of year 5,471,176 1,548,125 13,078,820 180,251,651 ------------ ----------- -------------- ------------- Net assets, end of year $ 0 $ 0 $ 0 $ 0 ============ =========== ============= =============
16 J. Master Trust: All plan investments are included under the Master Trust. At December 31, 1998, assets of the Plan represented 0% of the total assets under the Master Trust. This has decreased from 5.1% at December 31, 1997. The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1998: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $ 473,258,791 Prudential Life Insurance Company of America 236,989,116 Metropolitan Life Insurance Company* 594,847,154 Fidelity 25,803,449 Connecticut General 6,538,482 Monumental Life Insurance Company 6,869,338 At fair value: Fidelity Equity Income Fund* $1,464,615,296 Raytheon Company Common Stock Fund* $ 799,542,751 BT Pyramid Equity Index Fund* $ 745,602,791 Fidelity Balanced Fund* $ 442,796,289 Fidelity Magellan Fund* $ 379,680,454 Fidelity Blue Chip Fund* Templeton Foreign I Fund Fidelity Investment Grade Bond Fund Fidelity Retirement Money Market Vanguard Winsor Vanguard Wellesley TRP Small Cap Stock Raytheon Class A Wasting Stock Fund Raytheon GMH Wasting Stock Fund Loans receivable from participants -------------- -------------- -------------- -------------- -------------- -------------- Total investments 1,344,306,330 1,464,615,296 799,542,751 745,602,791 442,796,289 379,680,454 -------------- -------------- -------------- -------------- -------------- -------------- Receivables: Employer contribution Accrued investment income and other receivables 4,748,948 1,573,604 Transfer receivables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803 Cash and cash equivalents 123,969,201 11,004,025 3,330,147 -------------- -------------- -------------- -------------- -------------- -------------- Total assets 2,048,537,201 2,226,757,712 1,255,380,751 967,248,229 755,173,618 616,369,257 -------------- -------------- -------------- -------------- -------------- -------------- Liabilities: Payable for outstanding purchases 1,932,125 Accrued expenses and other payables 1,853,618 844,977 Transfer payables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803 -------------- -------------- -------------- -------------- -------------- -------------- Total liabilities 580,261,670 762,142,416 443,870,770 217,586,664 312,377,329 236,688,803 -------------- -------------- -------------- -------------- -------------- -------------- Net assets available for plan benefits $1,468,275,531 $1,464,615,296 $ 811,509,981 $ 749,661,565 $ 442,796,289 $ 379,680,454 ============== ============== ============== ============== ============== ==============
17 Templeton Investment Retirement Vanguard Vanguard Blue Chip Foreign I Grade Money Winsor Wellesley Fund Fund Bond Fund Market Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* Prudential Life Insurance Company of America Metropolitan Life Insurance Company* Fidelity Connecticut General Monumental Life Insurance Company At fair value: Fidelity Equity Income Fund* Raytheon Company Common Stock Fund* BT Pyramid Equity Index Fund* Fidelity Balanced Fund* Fidelity Magellan Fund* Fidelity Blue Chip Fund* $ 391,787,509 Templeton Foreign I Fund $ 6,966,704 Fidelity Investment Grade Bond Fund $ - Fidelity Retirement Money Market $ 13,202,524 Vanguard Winsor $ 41 Vanguard Wellesley $ 18 TRP Small Cap Stock Raytheon Class A Wasting Stock Fund Raytheon GMH Wasting Stock Fund Loans receivable from participants -------------- -------------- -------------- ------------- ------------- -------------- Total investments 391,787,509 6,966,704 - 13,202,524 41 18 -------------- -------------- -------------- ------------- ------------- -------------- Receivables: Employer contribution 3,595,261 Accrued investment income and other receivables Transfer receivables 191,269,141 6,966,652 16,715,590 Cash and cash equivalents -------------- -------------- -------------- ------------- ------------- -------------- Total assets 583,056,650 13,933,356 - 33,513,375 41 18 -------------- -------------- -------------- ------------- ------------- -------------- Liabilities: Payable for outstanding purchases Accrued expenses and other payables Transfer payables 191,269,141 6,966,652 16,715,590 -------------- -------------- -------------- ------------- ------------- -------------- Total liabilities 191,269,141 6,966,652 - 16,715,590 - - -------------- -------------- -------------- ------------- ------------- -------------- Net assets available for plan benefits $ 391,787,509 $ 6,966,704 $ - $ 16,797,785 $ 41 $ 18 ============== ============== ============== ============== ============== ==============
18 TRP Small RTN.A GMH Cap Stock Wasting Wasting Loan Fund Fund Fund Fund Other(1) Total Assets: Investments: At contract value: Bankers Trust* $ 473,258,791 Prudential Life Insurance Company of America 236,989,116 Metropolitan Life Insurance Company* 594,847,154 Fidelity 25,803,449 Connecticut General 6,538,482 Monumental Life Insurance Company 6,869,338 At fair value: Fidelity Equity Income Fund* 1,464,615,296 Raytheon Company Common Stock Fund* 799,542,751 BT Pyramid Equity Index Fund* 745,602,791 Fidelity Balanced Fund* 442,796,289 Fidelity Magellan Fund* 379,680,454 Fidelity Blue Chip Fund* 391,787,509 Templeton Foreign I Fund 6,966,704 Fidelity Investment Grade Bond Fund - Fidelity Retirement Money Market 13,202,524 Vanguard Winsor 41 Vanguard Wellesley 18 TRP Small Cap Stock $ 348 348 Raytheon Class A Wasting Stock Fund $ 116,129,149 116,129,149 Raytheon GMH Wasting Stock Fund $ 172,859,819 172,859,819 Loans receivable from participants $ 250,687,865 250,687,865 -------------- -------------- -------------- -------------- ------------- -------------- Total investments 348 116,129,149 172,859,819 250,687,865 - 6,128,177,888 -------------- -------------- -------------- -------------- ------------- -------------- Receivables: Employer contribution 3,595,261 Accrued investment income and other receivables 1,193,397 23,640 7,539,589 Transfer receivables 120,761,325 178,295,618 117,046,618 $ 855,826,675 4,035,178,551 Cash and cash equivalents 3,480,490 5,474,220 147,258,083 -------------- -------------- -------------- ------------- -------------- -------------- Total assets 348 241,564,361 356,653,297 367,734,483 855,826,675 10,321,749,372 -------------- -------------- -------------- ------------- -------------- -------------- Liabilities: Payable for outstanding purchases 1,932,125 Accrued expenses and other payables 41,711 62,061 2,802,367 Transfer payables 120,761,325 178,295,618 117,046,618 3,179,351,876 -------------- -------------- -------------- ------------- -------------- -------------- Total liabilities - 120,803,036 178,357,679 117,046,618 - 3,184,086,368 -------------- -------------- -------------- ------------- -------------- -------------- Net assets available for plan benefits $ 348 $120,761,325 $ 178,295,618 $ 250,687,865 $ 855,826,675 $7,137,663,004 ============== ============== ============== ============== ============== ============== Percentage of Master Trust that are Plan assets - 0.00% *Represent more than 5% of net assets available for plan benefits (1) Other represents Raytheon plans merging in from outside the Master Trust. Note: Not all funds within the Master Trust are available options to participants in the Plan.
19 J. Master Trust, Continued: The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1997: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $351,035,073 Prudential Life Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* $782,799,011 Raytheon Company Common Stock Fund* $745,980,294 BT Pyramid Equity Index Fund* $484,781,406 Fidelity Balanced Fund $117,556,481 Fidelity Magellan Fund $91,863,155 Fidelity Blue Chip Fund Templeton Foreign I Fund Fidelity Investment Grade Bond Fund Fidelity Retirement Money Market Fund Loans receivable from participants ------------ ------------ ------------ ------------ ------------ ----------- Total investments 939,889,852 782,799,011 745,980,294 484,781,406 117,556,481 91,863,155 ------------ ------------ ------------ ------------ ------------ ----------- Receivables: Employer contribution Accrued investment income and other receivables 5,489,592 1,161,112 Cash and cash equivalents 9,232,100 13,498,051 4,761,268 ------------ ------------ ------------ ------------ ------------ ----------- Total assets 949,121,952 782,799,011 764,967,937 490,703,786 117,556,481 91,863,155 ------------ ------------ ------------ ------------ ------------ ----------- Liabilities: Payable for outstanding purchases 6,340,318 Accrued expenses and other payables 1,480,875 1,200,471 ------------- ------------ ------------ ------------ ------------ ----------- Total liabilities - - 7,821,193 1,200,471 - - ------------- ------------ ------------ ------------ ------------ ----------- Net assets available for plan benefits $949,121,952 $782,799,011 $757,146,744 $489,503,315 $117,556,481 $91,863,155 ============ ============ ============ ============ ============ ===========
20 Templeton Investment Retirement Blue Chip Foreign I Grade Money Loan Fund Fund Bond Fund Market Fund Fund Total Assets: Investments: At contract value: Bankers Trust* $351,035,073 Prudential Life Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* 782,799,011 Raytheon Company Common Stock Fund* 745,980,294 BT Pyramid Equity Index Fund* 484,781,406 Fidelity Balanced Fund 117,556,481 Fidelity Magellan Fund 91,863,155 Fidelity Blue Chip Fund $136,586,123 136,586,123 Templeton Foreign I Fund $5,471,176 5,471,176 Fidelity Investment Grade Bond Fund $1,548,125 1,548,125 Fidelity Retirement Money Market Fund $12,186,085 12,186,085 Loans receivable from participants $166,395,767 166,395,767 ------------ ---------- ---------- ----------- ------------ ------------- Total investments 136,586,123 5,471,176 1,548,125 12,186,085 166,395,767 3,485,057,475 ------------ ---------- ---------- ----------- ------------ -------------- Receivables: Employer contribution 4,015,100 4,015,100 Accrued investment income and other receivables 6,650,704 Cash and cash equivalents 27,491,419 ------------ ---------- ---------- ----------- ------------ -------------- Total assets 136,586,123 5,471,176 1,548,125 16,201,185 166,395,767 3,523,214,698 Liabilities: Payable for outstanding purchases 6,340,318 Accrued expenses and other payables 2,681,346 ------------ ---------- ---------- ----------- ------------ -------------- Total liabilities - - - - - 9,021,664 ------------ ---------- ---------- ----------- ------------ -------------- Net assets available for plan benefits $136,586,123 $5,471,176 $1,548,125 $16,201,185 $166,395,767 $3,514,193,034 ============ ========== ========== =========== ============ ============== Percentage of Master Trust that are Plan assets - 5.1% *Represent more than 5% of net assets available for plan benefits Note: Not all funds within the Master Trust are available options to participants in the Plan.
21 J. Master Trust, Continued: The following is a summary of investment income by fund under the Master Trust for the year ended December 31, 1998: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Investment income: Net appreciation (depreciation) of assets $ 30,695 $ 49,019,748 $74,202,083 $149,571,006 $16,091,158 $62,195,801 Interest & Dividends 81,886,632 86,279,682 1,792 42,537,357 13,255,763 ----------- ------------ ----------- ------------ ----------- ----------- Total investment income/(loss) $81,917,327 $135,299,430 $74,203,875 $149,571,006 $58,628,515 $75,451,564 =========== ============ =========== ============ =========== ===========
22 Templeton Investment Retirement Vanguard Vanguard Blue Chip Foreign I Grade Money Winsor Wellesley Fund Fund Bond Fund Market Fund Fund Fund Investment income: Net appreciation (depreciation) of assets $60,264,181 $(1,095,980) $ 17,635 $2,864,378 $1,379,950 Interest & Dividends 13,550,491 752,610 162,858 $ 349,740 ----------- ----------- -------- ---------- ---------- ---------- Total investment income/(loss) $73,814,672 $ (343,370) $180,493 $ 349,740 $2,864,378 $1,379,950 =========== =========== ======== ========== ========== ==========
23 TRP Small RTN.A GMH Cap Stock Wasting Wasting Loan Fund Fund Fund Fund Total Investment income: Net appreciation (depreciation) of assets $ 15 $ (35,268) $44,604,025 $459,109,427 Interest & Dividends $15,334,403 254,111,328 ----------- ---------- ----------- ----------- ------------ Total investment income/(loss) $ 15 $ (35,268) $44,604,025 $15,334,403 $713,220,755 =========== ========== =========== =========== ============
1 EXHIBIT 99.2a CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (File No. 333-56117) of Raytheon Company of our report dated June 4, 1999 relating to the financial statements of the Raytheon Savings and Investment Plan for Specified Hourly Payroll Employees, which appears in this Form 10-K/A. PricewaterhouseCoopers LLP Boston, Massachusetts June 29, 1999
1 EXHIBIT 99.3 RAYTHEON EMPLOYEE SAVINGS AND INVESTMENT PLAN FINANCIAL STATEMENTS TO ACCOMPANY 1998 FORM 5500 ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN UNDER ERISA OF 1974 FOR THE YEAR ENDED DECEMBER 31, 1998 The supplemental schedules to the Plan's Form 5500 are not required since the Plan's assets are held in a Master Trust. Accordingly, the Plan administrator must file detailed financial information, including the supplemental schedules, separately with the Department of Labor.
2 REPORT OF INDEPENDENT ACCOUNTANTS To the Participants and Administrator of the Raytheon Employee Savings and Investment Plan: In our opinion, the accompanying statements of net assets available for plan benefits and the related statement of changes in net assets available for plan benefits present fairly, in all material respects, the net assets available for benefits of the Raytheon Employee Savings and Investment Plan (the "Plan") at December 31, 1998 and 1997, and the changes in net assets available for benefits for the year ended December 31, 1998 in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. PricewaterhouseCoopers LLP Boston, Massachusetts June 4, 1999
3 RAYTHEON EMPLOYEE SAVINGS AND INVESTMENT PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS as of December 31, 1998 and 1997 1998 1997 Assets: Master trust investments: At contract value (Notes B, E and I) $ 21,118,702 $ 20,126,493 At fair value (Notes B, F and I) 57,350,890 41,496,932 ------------ ------------ 78,469,592 61,623,425 ------------ ------------ Receivables: Accrued investment income and other receivables 75,163 79,759 Transfer receivables (Note H) 210,313,280 - Cash and cash equivalents 2,117,237 422,687 ------------ ------------ Total assets 290,975,272 62,125,871 ------------ ------------ Liabilities: Payable for outstanding purchases 21,566 72,220 Accrued expenses and other payables 32,586 34,682 ------------ ------------ Total liabilities 54,152 106,902 ------------ ------------ Net assets available for plan benefits $290,921,120 $ 62,018,969 ============ ============ The accompanying notes are an integral part of the financial statements.
4 RAYTHEON EMPLOYEE SAVINGS AND INVESTMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS for the year ended December 31, 1998 Additions to net assets attributable to: Investment income (Notes B, E and I): Net appreciation of investments $ 7,179,846 Interest & Dividends 3,401,424 ------------ 10,581,270 Contributions and deferrals: Employee deferrals 10,671,948 Employer contributions 5,466,458 Transfers (Note G and H) 211,989,472 ------------ 228,127,878 Total additions 238,709,148 ------------ Deductions from net assets attributable to: Distributions to participants 9,761,895 Administrative expenses 5,356 Transfers (Note G) 39,746 ------------ Total deductions 9,806,997 Increase in net assets 228,902,151 Net assets, beginning of year 62,018,969 ------------ Net assets, end of year $290,921,120 ============ The accompanying notes are an integral part of the financial statements.
5 RAYTHEON EMPLOYEE SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS A. Description of Plan: General The following description of the Raytheon Employee Savings and Investment Plan (the "Plan") provides only general information. Participants should refer to the plan document for a complete description of the Plan's provisions. As more fully described in Note H, effective January 1, 1999, the participants and related account balances of several defined contribution plans (collectively referred to as "Prior Plans") were merged into the Plan. The Plan is a defined contribution plan and covers the employees of the Raytheon Support Services Company and the Range Systems Engineer Support Company, respectively, wholly-owned subsidiaries of Raytheon Company (the "Company"). To participate in the Plan, eligible employees must have three months of service and may enter the Plan only on the first day of each month. Effective January 1, 1999, certain union employees of Raytheon Systems Company, Cedarapids, Inc. and Raytheon Aircraft Company who participated in Prior Plans were merged into the Plan and all eligible employees, including those from Prior Plans, may join the Plan immediately. In addition, the Raytheon Stock Ownership Plan for Specified Hourly Payroll Employees (referred to as the "Prior ESOP Plan") was merged into the Plan and created an additional employee stock ownership portion (ESOP) of the Plan. The purpose of the Plan is to provide participants with a tax-effective means of meeting both short and long-term investment objectives. The Plan is intended to be a "qualified cash or deferred arrangement" under the Internal Revenue Code (the "Code"). The ESOP is intended to be an employee stock ownership arrangement in compliance with all of the related requirements for a qualified stock bonus plan as defined in the Code. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan's investments are combined with the investments of other similar defined contribution plans of Raytheon Company and subsidiaries into the Raytheon Company Master Trust for Defined Contribution Plans ("Master Trust"). The trustee of the Master Trust maintains a separate account reflecting the equitable share in the Master Trust of each plan. Investment income and administrative expenses relating to the Master Trust are allocated to the individual plan based upon average monthly balances invested by each plan. Contributions and Deferrals Eligible employees are allowed to defer to the Plan up to 17% of their salaries. In 1995, the Company began to make qualified non-elective contributions (QNECs) to certain accounts based on specific employee agreements. For 1998, the annual employee deferral for a participant cannot exceed $10,000. Rollover contributions from other qualified plans are accepted by the Plan.
6 Effective January 1, 1999, eligible employees at certain divisions of Raytheon Systems Company have different deferral limitations ranging from 10% to 20%, depending upon division. In addition, for certain union employees at Raytheon Systems Company, Cedarapids, Inc. and Raytheon Aircraft Company, the Company will match amounts at 100%, 50% of the first 6% or 50% of the first 3% of elective deferrals. The maximum match varies by division and is 4%, 3% or 1.5% of compensation. The Company match is participant directed at certain divisions. At divisions where the Company match is not participant directed, the match shall be made to the Raytheon Common Stock Fund and must be held in that fund until the beginning of the fifth Plan Year following the Plan Year for which the contribution was made. For certain divisions, the Company will also make QNECs, employer contributions based on hours of service or percent of pay and/or ESOP contributions. When applicable, ESOP contributions are equal to one-half of one percent of the participant's compensation. The ESOP portion of the Plan provides for investment, primarily in Raytheon Company Class B common stock; however, as required by the Code, the Plan permits limited diversification after a participant attains age 55 or completes 10 years of plan participation (including participation in the Prior ESOP Plan). Participants may invest their deferrals in increments of 1% in any combination of seven funds: (a) a Fixed Income Fund under which assets are invested primarily in contracts providing for fixed rates of interest for specified periods of time, (b) the Fidelity Equity Income Fund which invests in shares of a mutual fund consisting primarily of income-producing equity securities, (c) a Raytheon Common Stock Fund which invests in shares of Raytheon Company common stock, (d) a Stock Index Fund which invests in a commingled pool consisting primarily of equity securities and is designed to track the S&P 500 Index, (e) the Fidelity Balanced Fund which invests in shares of a mutual fund consisting primarily of equity securities, bonds and money market instruments, (f) the Fidelity Magellan Fund, a growth fund which invests primarily in equities of companies of all types and sizes, and (g) the Fidelity Blue Chip Fund, a growth fund which invests primarily in equities of well known and established companies. Dividends and distributions from all fund options are reinvested in their respective funds; stock dividends, stock splits and similar changes are also reflected in the funds. Effective January 1, 1999, the Plan will offer several additional fund options that were available in prior plans. These options include: Templeton Foreign I Fund - a long-term capital growth fund which invests in stocks and debt obligations of companies and governments of any nation. Vanguard Morgan Growth Fund - investments consist primarily of common stocks of corporations with either established growth patterns, emerging growth potential, or cyclical growth patterns.
7 Vanguard Windsor Fund - investments consist of a portfolio of common stocks, the objective of which is primarily long-term growth and secondarily, current income through dividends. Vanguard Wellesley Income Fund - investments consist of about 60% fixed-income securities and 40% common stocks. The Fund objective is primarily current income through dividends, and secondarily, moderate capital growth. T. Rowe Price Small Cap Stock Fund - invests in equity securities of small, high growth potential companies. RTN-A Wasting Fund and GMH Wasting Fund - hold shares of Raytheon Company Class A common stock or General Motors Class H common stock, respectively, that were transferred into the Plan from Prior Plans. These options will not be open for additional contributions and will only be available through December 31, 2002. Participant Accounts Each participant's account is credited with the participant's deferral, any applicable employer contributions (QNECs, matching contributions, employer or ESOP) and an allocation of Plan earnings. Plan earnings are allocated based on account balances by fund. Vesting Participants are immediately vested in their voluntary deferrals and employer contributions plus actual earnings thereon. Certain union employees at Raytheon Systems Company, Cedarapids, Inc. and Raytheon Aircraft Company, whose accounts merged into the Plan effective January 1, 1999, will retain the vesting schedule from their Prior Plans. Vesting requirements for employer contributions plus earnings thereon may vary depending upon when an employee became eligible to participate in the Prior Plans. Vesting generally occurs upon completion of five years of service or upon three years of Plan participation or upon retirement, death, disability, or attainment of normal retirement age. Forfeitures of the non-vested portions of terminated participants' accounts are used to reduce required contributions of the Company. Distributions to Participants A participant may withdraw all or a portion of deferrals, employer contributions and related earnings upon attainment of age 59 1/2. For reasons of financial hardship, as defined in the plan document, a participant may withdraw all or a portion of deferrals. On termination of employment, a participant will receive a lump-sum distribution unless the vested account is valued in excess of $3,500 ($5,000 effective January 1, 1999) and the participant elects to defer distribution. A retiree or a beneficiary of a deceased participant may defer the distribution until January of the year following attainment of age 65.
8 Loans to Participants A participant may borrow against a portion of the balance in the participant's account, subject to certain restrictions. The maximum amount of a loan is the lesser of one-half of the participant's account balance or $50,000. The minimum loan which may be granted is $500. The interest rate applied is equal to the prime rate published in the Wall Street Journal on the first business day in June and December of each year. Loans must be repaid over a period of up to five years by means of payroll deductions. In certain cases, the repayment period may be extended up to 15 years. Interest paid to the Plan on loans to participants is credited to the borrower's account in the investment fund to which repayments are made. Administrative Expenses The Plan participants pay substantially all expenses of administering the Plan. B. Summary of Significant Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting. The Plan's investment contracts are fully benefit-responsive and are therefore included in the financial statements at their contract value, defined as net employee contributions plus interest earned on the underlying investments at contracted rates. Contract value approximates fair value. Investments in mutual funds and the commingled pool are valued at the closing net asset value reported on the last business day of the year. Investments in securities (common stocks) traded on a national ecurities exchange are valued at the last reported sales price on the last business day of the year. Cash equivalents are short-term money market instruments and are valued at cost, which approximates fair value. Participant loans are valued at cost, which approximates fair value. Security transactions are recorded on the trade date. Except for its investment contracts (Note E), the Plan's investments are held by bank-administered trust funds. Payables for outstanding security transactions represent trades which have occurred but have not yet settled. The Plan presents in the statement of changes in net assets the net appreciation (depreciation) in the fair value of its investments, which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. Dividend income is recorded on the ex-dividend date. Income from other investments is recorded as earned on an accrual basis. Investment income includes both dividend and interest income. Benefits are recorded when paid. Certain items in the 1997 financial statements have been reclassified to conform to the 1998 presentation.
9 The preparation of the financial statements in conformity with generally accepted accounting principles requires the Plan administrator to make significant estimates and assumptions that affect the reported amounts of net assets and liabilities available for benefits at the date of the financial statements and the changes in net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from the estimates included in the financial statements. The Plan provides for various investment options in any combination of stocks, bonds, fixed income securities, mutual funds and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the statement of net assets available for plan benefits and the statement of changes in net assets available for plan benefits. C. Federal Income Tax Status: The Internal Revenue Service has determined and informed the Company by letter dated June 1995 that the Plan and related trust are designed in accordance with applicable sections of the Code. The Plan has been amended since receiving the determination letter. However, the Plan administrator and the Plan's legal counsel believe that the Plan is currently designed and being operated in compliance with applicable requirements of the Code. Therefore, no provision for income taxes has been included in the Plan's financial statements. D. Plan Termination: Although it has not expressed any intention to do so, the Company reserves the right under the Plan at any time or times to discontinue its contributions and to terminate the Plan subject to the provisions of ERISA. In the event of plan termination, after payment of all expenses and proportional adjustment of accounts to reflect such expenses, fund losses or profits, and reallocations, each participant shall be entitled to receive any amounts then credited to his or her account. E. Investment Contracts: The Plan invests in collateralized fixed income investment portfolios which are managed by insurance companies and investment management firms. The credited interest rates are adjusted semiannually to reflect the experienced and anticipated yields to be earned on such investments, based on their book value. The annualized average yield and credited interest rates were as follows:
10 Annualized Credited Average Yield Interest Rate For the year ended December 31, 1998: Banker's Trust (WBS 92-485) 6.85% 6.85% Metropolitan Life Insurance Company (GIC GA-12908) 6.58% 6.58% Metropolitan Life Insurance Company (GIC GA-13659) 6.10% 6.10% Prudential Asset Management Company (GIC 917163-001) 6.75% 6.75% Connecticut General (GIC 0025174) 5.58% 5.58% Fidelity IPL (633-GCDC) 5.62% 5.62% Monumental Life Insurance Company (GIC BDA00463FR-00) 7.84% 7.84% For the year ended December 31, 1997: Banker's Trust (WBS 92-485) 6.95% 6.95% Metropolitan Life Insurance Company (GIC GA-12908) 6.86% 6.86% Metropolitan Life Insurance Company (GIC GA-13659) 6.43% 6.43% Prudential Asset Management Company (GIC 917163-001) 6.99% 6.99% The contract values are subject to limitations in certain situations including large workforce reductions and plan termination. In the financial statements, the two Metropolitan Life Insurance Company contracts are recorded as one investment option. F. Related Party Transactions: The Plan's trustee is Fidelity Management Trust Company (the "Trustee"). The Trustee holds the funds for the Plan and is responsible for managing the Plan's investment assets, executing all investment transactions, recording approved transactions, and, therefore these transactions qualify as party-in-interest. In accordance with the provisions of the Plan, the Trustee acts as the Plan's agent for purchases and sales of shares of Raytheon Company common stock. These transactions are performed on a Master Trust level. For the Master Trust, purchases amounted to $288,116,995 and sales amounted to $257,878,566 for the year ended December 31, 1998. G. Transfers: Transfers include transfers of participant accounts, individually and/or in groups, between the Plan and all other plans included in the Raytheon Company Master Trust for those participants and/or groups of participants who changed plans during the year. Transfers also include transfers of participant accounts, individually and/or in-groups, between the Plan and similar savings plans of other companies for those participants who changed companies during the year.
11 H. Transfer Receivables: As part of an overall effort to minimize plan design differences and increase administrative efficiencies, the Board of Directors of Raytheon Company voted on December 16, 1998 to merge the participants and their account balances from several Prior Plans into the Plan. The Prior Plans ceased to exist on December 31, 1998 and effective January 1, 1999, the provisions of the Plan govern. The transfer receivable by Prior Plan is as follows: Raytheon Savings and Investment Plan for Specified Hourly Payroll Employees $109,994,457 Raytheon Tucson Bargaining Unit Employees Savings and Investment Plan 46,783,076 Raytheon Savings and Investment Plan (10014) 18,676,997 Serv-Air, Inc. Savings and Retirement Plan 18,053,874 Raytheon Stock Ownership Plan for Specified Hourly Payroll Employees 16,804,876 ------------ Total $210,313,280 ============
12 I. Fund Data: The following is a summary of net assets available for plan benefits by fund as of December 31, 1998: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Blue Chip Fund Fund Stock Fund Fund Fund Fund Fund Assets: Master trust investments: At contract value: Bankers Trust $ 7,434,772 Prudential Life Insurance Company of America 3,723,037 Metropolitan Life Insurance Company 9,344,894 Fidelity 405,365 Connecticut General 102,718 Monumental Life Insurance Company 107,916 At fair value: Fidelity Equity Income Fund $10,975,776 Raytheon Company Common Stock Fund $8,925,215 BT Pyramid Equity Index Fund $10,496,295 Fidelity Balanced Fund $4,014,520 Fidelity Magellan Fund $7,549,319 Fidelity Blue Chip Fund $9,160,057 Fund Loans receivable from participants ------------ ----------- ----------- ----------- ---------- ----------- ----------- Total investments 21,118,702 10,975,776 8,925,215 10,496,295 4,014,520 7,549,319 9,160,057 ------------ ----------- ----------- ----------- ---------- ----------- ----------- Receivables: Accrued investment income and other receivables 53,010 22,153 Cash and cash equivalents 1,947,524 122,833 46,880 ----------- ----------- ----------- ----------- ---------- ---------- ---------- Total assets 23,066,226 10,975,776 9,101,058 10,565,328 4,014,520 7,549,319 9,160,057 ------------ ----------- ----------- ----------- ---------- ---------- ---------- Liabilities: Payable for outstanding purchases 21,566 Accrued expenses and other payables 20,691 11,895 ------------ ----------- ----------- ----------- ---------- ---------- ---------- Total liabilities - - 42,257 11,895 - - - ------------ ----------- ----------- ----------- ---------- ---------- ---------- Net assets available for plan benefits $ 23,066,226 $10,975,776 $9,058,801 $10,553,433 $4,014,520 $7,549,319 $9,160,057 ============ =========== ========== =========== ========== ========== ==========
13 Loan Fund Other(1) Total Assets: Master trust investments: At contract value: Bankers Trust $ 7,434,772 Prudential Insurance Company of America 3,723,037 Metropolitan Life Insurance Company 9,344,894 Fidelity 405,365 Connecticut General 102,718 Monumental Life Insurance Company 107,916 At fair value: Fidelity Equity Income Fund 10,975,776 Raytheon Company Common Stock Fund 8,925,215 BT Pyramid Equity Index Fund 10,496,295 Fidelity Balanced Fund 4,014,520 Fidelity Magellan Fund 7,549,319 Fidelity Blue Chip Fund 9,160,057 Loans receivable from participants $ 6,229,708 6,229,708 ----------- ------------ ------------ Total investments 6,229,708 - 78,469,592 ----------- ------------ ------------ Receivables: Accrued investment income and other receivables 75,163 Transfer Receivables $210,313,280 210,313,280 Cash and cash equivalents 2,117,237 ----------- ------------ ------------ Total assets 6,229,708 210,313,280 290,975,272 ----------- ------------ ------------ Liabilities: Payable for outstanding purchases 21,566 Accrued expenses and other payables 32,586 ----------- ------------ ------------ Total liabilities - - 54,152 ----------- ------------ ------------ Net assets available for plan benefits $ 6,229,708 $210,313,280 $290,921,120 =========== ============ ============ (1) See Note H.
14 I. Fund Data, Continued: The following is a summary of net assets available for plan benefits by fund as of December 31, 1997: Raytheon Fixed Equity Common Stock Balanced Magellan Income Fund Fund Stock Fund Index Fund Fund Fund 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
15 Blue Chip Loan Fund 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
16 I. Fund Data, Continued: The following is a summary of changes in net assets available for plan benefits by fund for the year ended December 31, 1998: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Blue Chip Fund Fund Stock Fund Fund Fund Fund Fund Additions to net assets attributable to: Investment income: Net appreciation of investments $ 783 $ 549,040 $ 995,655 $ 2,336,298 $ 267,944 $ 1,350,108 $ 1,680,018 Interest & Dividends 1,380,765 623,016 376,854 321,620 339,826 ----------- ------------ ----------- ----------- ----------- ------------ ------------ 1,381,548 1,172,056 995,655 2,336,298 644,798 1,671,728 2,019,844 ----------- ------------ ----------- ----------- ----------- ------------ ------------ Contributions and deferrals: Employee deferrals 1,717,217 1,720,660 1,619,094 1,708,027 627,263 1,570,913 1,708,774 Employer contributions 3,341,633 380,809 500,677 376,096 138,312 347,345 381,586 Transfers 329,389 23,545 203,917 173,239 986 25,517 47,976 ------------ ------------ ----------- ----------- ----------- ------------ ------------ 5,388,239 2,125,014 2,323,688 2,257,362 766,561 1,943,775 2,138,336 ------------ ------------ ----------- ----------- ----------- ------------ ------------ Total additions 6,769,787 3,297,070 3,319,343 4,593,660 1,411,359 3,615,503 4,158,180 ------------ ------------ ----------- ----------- ----------- ------------ ------------ Deductions from net assets attributable to: Distributions to participants 4,202,881 1,133,189 838,121 991,231 388,044 583,103 780,586 Administrative expenses 1,796 884 811 708 278 401 478 Transfers 6,061 21,342 12,343 ------------ ------------ ----------- ----------- ----------- ------------ ------------ Total deductions 4,204,677 1,140,134 838,932 991,939 409,664 595,847 781,064 ------------ ------------ ----------- ----------- ----------- ------------ ------------ Interfund transfers 176,339 (923,858) (2,044,621) (332,231) 89,081 618,804 1,183,529 ------------ ------------ ----------- ----------- ----------- ----------- ------------ Increase in net assets 2,741,449 1,233,078 435,790 3,269,490 1,090,776 3,638,460 4,560,645 ------------ ------------ ----------- ----------- ------------ ------------ ------------ Net assets, beginning of year 20,324,777 9,742,698 8,623,011 7,283,943 2,923,744 3,910,859 4,599,412 ------------ ------------ ----------- ----------- ------------ ------------ ------------ Net assets, end of year $ 23,066,226 $ 10,975,776 $ 9,058,801 $10,553,433 $ 4,014,520 $ 7,549,319 $ 9,160,057 ============ ============ =========== =========== ============ ============ ============
17 Loan Fund Other Total Additions to net assets attributable to: Investment income: Net appreciation of investments $ 7,179,846 Interest & Dividends $ 359,343 3,401,424 ----------- ------------- ------------- 359,343 - 10,581,270 ------------ ------------- ------------- Contributions and deferrals: Employee deferrals 10,671,948 Employer contributions 5,466,458 Transfers 871,623 $210,313,280 211,989,472 ------------ ------------- ------------- 871,623 210,313,280 228,127,878 ------------ ------------- ------------- Total additions 1,230,966 210,313,280 238,709,148 ------------ ------------- ------------- Deductions from net assets attributable to: Distributions to participants 844,740 9,761,895 Administrative expenses 5,356 Transfers 39,746 ------------ -------------- ------------- Total deductions 844,740 - 9,806,997 ------------ -------------- ------------- Interfund transfers 1,232,957 ----------- -------------- ------------- Increase in net assets 1,619,183 210,313,280 228,902,151 ----------- -------------- ------------- Net assets, beginning of year 4,610,525 - 62,018,969 ----------- -------------- ------------- Net assets, end of year $ 6,229,708 $ 210,313,280 $ 290,921,120 =========== ============== =============
18 J. Master Trust: All plan investments are included under the Master Trust. At December 31, 1998, assets of the Plan represented 4.08% of the total assets under the Master Trust. This has decreased from 1.8% at December 31, 1997. The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1998: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $ 473,258,791 Prudential Life Insurance Company of America 236,989,116 Metropolitan Life Insurance Company* 594,847,154 Fidelity 25,803,449 Connecticut General 6,538,482 Monumental Life Insurance Company 6,869,338 At fair value: Fidelity Equity Income Fund* $1,464,615,296 Raytheon Company Common Stock Fund* $ 799,542,751 BT Pyramid Equity Index Fund* $ 745,602,791 Fidelity Balanced Fund* $ 442,796,289 Fidelity Magellan Fund* $ 379,680,454 Fidelity Blue Chip Fund* Templeton Foreign I Fund Fidelity Investment Grade Bond Fund Fidelity Retirement Money Market Vanguard Winsor Vanguard Wellesley TRP Small Cap Stock Raytheon Class A Wasting Stock Fund Raytheon GMH Wasting Stock Fund Loans receivable from participants -------------- -------------- -------------- -------------- -------------- -------------- Total investments 1,344,306,330 1,464,615,296 799,542,751 745,602,791 442,796,289 379,680,454 -------------- -------------- -------------- -------------- -------------- -------------- Receivables: Employer contribution Accrued investment income and other receivables 4,748,948 1,573,604 Transfer receivables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803 Cash and cash equivalents 123,969,201 11,004,025 3,330,147 -------------- -------------- -------------- -------------- -------------- -------------- Total assets 2,048,537,201 2,226,757,712 1,255,380,751 967,248,229 755,173,618 616,369,257 -------------- -------------- -------------- -------------- -------------- -------------- Liabilities: Payable for outstanding purchases 1,932,125 Accrued expenses and other payables 1,853,618 844,977 Transfer payables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803 -------------- -------------- -------------- -------------- -------------- -------------- Total liabilities 580,261,670 762,142,416 443,870,770 217,586,664 312,377,329 236,688,803 -------------- -------------- -------------- -------------- -------------- -------------- Net assets available for plan benefits $1,468,275,531 $1,464,615,296 $ 811,509,981 $ 749,661,565 $ 442,796,289 $ 379,680,454 ============== ============== ============== ============== ============== ==============
19 Templeton Investment Retirement Vanguard Vanguard Blue Chip Foreign I Grade Money Winsor Wellesley Fund Fund Bond Fund Market Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* Prudential Life Insurance Company of America Metropolitan Life Insurance Company* Fidelity Connecticut General Monumental Life Insurance Company At fair value: Fidelity Equity Income Fund* Raytheon Company Common Stock Fund* BT Pyramid Equity Index Fund* Fidelity Balanced Fund* Fidelity Magellan Fund* Fidelity Blue Chip Fund* $ 391,787,509 Templeton Foreign I Fund $ 6,966,704 Fidelity Investment Grade Bond Fund $ - Fidelity Retirement Money Market $ 13,202,524 Vanguard Winsor $ 41 Vanguard Wellesley $ 18 TRP Small Cap Stock Raytheon Class A Wasting Stock Fund Raytheon GMH Wasting Stock Fund Loans receivable from participants -------------- -------------- -------------- ------------- ------------- -------------- Total investments 391,787,509 6,966,704 - 13,202,524 41 18 -------------- -------------- -------------- ------------- ------------- -------------- Receivables: Employer contribution 3,595,261 Accrued investment income and other receivables Transfer receivables 191,269,141 6,966,652 16,715,590 Cash and cash equivalents -------------- -------------- -------------- ------------- ------------- -------------- Total assets 583,056,650 13,933,356 - 33,513,375 41 18 -------------- -------------- -------------- ------------- ------------- -------------- Liabilities: Payable for outstanding purchases Accrued expenses and other payables Transfer payables 191,269,141 6,966,652 16,715,590 -------------- -------------- -------------- ------------- ------------- -------------- Total liabilities 191,269,141 6,966,652 - 16,715,590 - - -------------- -------------- -------------- ------------- ------------- -------------- Net assets available for plan benefits $ 391,787,509 $ 6,966,704 $ - $ 16,797,785 $ 41 $ 18 ============== ============== ============== ============== ============== ==============
20 TRP Small RTN.A GMH Cap Stock Wasting Wasting Loan Fund Fund Fund Fund Other(1) Total Assets: Investments: At contract value: Bankers Trust* $ 473,258,791 Prudential Life Insurance Company of America 236,989,116 Metropolitan Life Insurance Company* 594,847,154 Fidelity 25,803,449 Connecticut General 6,538,482 Monumental Life Insurance Company 6,869,338 At fair value: Fidelity Equity Income Fund* 1,464,615,296 Raytheon Company Common Stock Fund* 799,542,751 BT Pyramid Equity Index Fund* 745,602,791 Fidelity Balanced Fund* 442,796,289 Fidelity Magellan Fund* 379,680,454 Fidelity Blue Chip Fund* 391,787,509 Templeton Foreign I Fund 6,966,704 Fidelity Investment Grade Bond Fund - Fidelity Retirement Money Market 13,202,524 Vanguard Winsor 41 Vanguard Wellesley 18 TRP Small Cap Stock $ 348 348 Raytheon Class A Wasting Stock Fund $ 116,129,149 116,129,149 Raytheon GMH Wasting Stock Fund $ 172,859,819 172,859,819 Loans receivable from participants $ 250,687,865 250,687,865 -------------- -------------- -------------- -------------- ------------- -------------- Total investments 348 116,129,149 172,859,819 250,687,865 - 6,128,177,888 -------------- -------------- -------------- -------------- ------------- -------------- Receivables: Employer contribution 3,595,261 Accrued investment income and other receivables 1,193,397 23,640 7,539,589 Transfer receivables 120,761,325 178,295,618 117,046,618 $ 855,826,675 4,035,178,551 Cash and cash equivalents 3,480,490 5,474,220 147,258,083 -------------- -------------- -------------- ------------- -------------- -------------- Total assets 348 241,564,361 356,653,297 367,734,483 855,826,675 10,321,749,372 -------------- -------------- -------------- ------------- -------------- -------------- Liabilities: Payable for outstanding purchases 1,932,125 Accrued expenses and other payables 41,711 62,061 2,802,367 Transfer payables 120,761,325 178,295,618 117,046,618 3,179,351,876 -------------- -------------- -------------- ------------- -------------- -------------- Total liabilities - 120,803,036 178,357,679 117,046,618 - 3,184,086,368 -------------- -------------- -------------- ------------- -------------- -------------- Net assets available for plan benefits $ 348 $120,761,325 $ 178,295,618 $ 250,687,865 $ 855,826,675 $7,137,663,004 ============== ============== ============== ============== ============== ============== Percentage of Master Trust that are Plan assets - 4.08% *Represent more than 5% of net assets available for plan benefits (1) Other represents Raytheon plans merging in from outside the Master Trust. Note: Not all funds within the Master Trust are available options to participants in the Plan.
21 J. Master Trust, Continued: The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1997: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $351,035,073 Prudential Life Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* $782,799,011 Raytheon Company Common Stock Fund* $745,980,294 BT Pyramid Equity Index Fund* $484,781,406 Fidelity Balanced Fund $117,556,481 Fidelity Magellan Fund $91,863,155 Fidelity Blue Chip Fund Templeton Foreign I Fund Fidelity Investment Grade Bond Fund Fidelity Retirement Money Market Fund Loans receivable from participants ------------ ------------ ------------ ------------ ------------ ----------- Total investments 939,889,852 782,799,011 745,980,294 484,781,406 117,556,481 91,863,155 ------------ ------------ ------------ ------------ ------------ ----------- Receivables: Employer contribution Accrued investment income and other receivables 5,489,592 1,161,112 Cash and cash equivalents 9,232,100 13,498,051 4,761,268 ------------ ------------ ------------ ------------ ------------ ----------- Total assets 949,121,952 782,799,011 764,967,937 490,703,786 117,556,481 91,863,155 ------------ ------------ ------------ ------------ ------------ ----------- Liabilities: Payable for outstanding purchases 6,340,318 Accrued expenses and other payables 1,480,875 1,200,471 ------------- ------------ ------------ ------------ ------------ ----------- Total liabilities - - 7,821,193 1,200,471 - - ------------- ------------ ------------ ------------ ------------ ----------- Net assets available for plan benefits $949,121,952 $782,799,011 $757,146,744 $489,503,315 $117,556,481 $91,863,155 ============ ============ ============ ============ ============ ===========
22 Templeton Investment Retirement Blue Chip Foreign I Grade Money Loan Fund Fund Bond Fund Market Fund Fund Total Assets: Investments: At contract value: Bankers Trust* $351,035,073 Prudential Life Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* 782,799,011 Raytheon Company Common Stock Fund* 745,980,294 BT Pyramid Equity Index Fund* 484,781,406 Fidelity Balanced Fund 117,556,481 Fidelity Magellan Fund 91,863,155 Fidelity Blue Chip Fund $136,586,123 136,586,123 Templeton Foreign I Fund $5,471,176 5,471,176 Fidelity Investment Grade Bond Fund $1,548,125 1,548,125 Fidelity Retirement Money Market Fund $12,186,085 12,186,085 Loans receivable from participants $166,395,767 166,395,767 ------------ ---------- ---------- ----------- ------------ -------------- Total investments 136,586,123 5,471,176 1,548,125 12,186,085 166,395,767 3,485,057,475 ------------ ---------- ---------- ----------- ------------ -------------- Receivables: Employer contribution 4,015,100 4,015,100 Accrued investment income and other receivables 6,650,704 Cash and cash equivalents 27,491,419 ------------ ---------- ---------- ----------- ------------ -------------- Total assets 136,586,123 5,471,176 1,548,125 16,201,185 166,395,767 3,523,214,698 ------------ ---------- ---------- ----------- ------------ -------------- Liabilities: Payable for outstanding purchases 6,340,318 Accrued expenses and other payables 2,681,346 ------------ ---------- ---------- ----------- ------------ -------------- Total liabilities - - - - - 9,021,664 ------------ ---------- ---------- ----------- ------------ -------------- Net assets available for plan benefits $136,586,123 $5,471,176 $1,548,125 $16,201,185 $166,395,767 $3,514,193,034 ============ ========== ========== =========== ============ ============== Percentage of Master Trust that are Plan assets - 1.76% *Represent more than 5% of net assets available for plan benefits Note: Not all funds within the Master Trust are available options to participants in the Plan.
23 J. Master Trust, Continued: The following is a summary of investment income by fund under the Master Trust for the year ended December 31, 1998: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Investment income: Net appreciation (depreciation) of assets $ 30,695 $ 49,019,748 $74,202,083 $149,571,006 $16,091,158 $62,195,801 Interest & Dividends 81,886,632 86,279,682 1,792 42,537,357 13,255,763 ----------- ------------ ----------- ------------ ----------- ----------- Total investment income/(loss) $81,917,327 $135,299,430 $74,203,875 $149,571,006 $58,628,515 $75,451,564 =========== ============ =========== ============ =========== ===========
24 Templeton Investment Retirement Vanguard Vanguard Blue Chip Foreign I Grade Money Winsor Wellesley Fund Fund Bond Fund Market Fund Fund Fund Investment income: Net appreciation (depreciation) of assets $60,264,181 $(1,095,980) $ 17,635 $2,864,378 $1,379,950 Interest & Dividends 13,550,491 752,610 162,858 $ 349,740 ----------- ----------- -------- ---------- ---------- ---------- Total investment income/(loss) $73,814,672 $ (343,370) $180,493 $ 349,740 $2,864,378 $1,379,950 =========== =========== ======== ========== ========== ==========
25 TRP Small RTN.A GMH Cap Stock Wasting Wasting Loan Fund Fund Fund Fund Total Investment income: Net appreciation (depreciation) of assets $ 15 $ (35,268) $44,604,025 $459,109,427 Interest & Dividends $15,334,403 254,111,328 ----------- ---------- ----------- ----------- ------------ Total investment income/(loss) $ 15 $ (35,268) $44,604,025 $15,334,403 $713,220,755 =========== ========== =========== =========== ============
1 EXHIBIT 99.3a CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (File No. 333-56117) of Raytheon Company of our report dated June 4, 1999 relating to the financial statements of the Raytheon Employee Savings and Investment Plan, which appears in this Form 10-K/A. PricewaterhouseCoopers LLP Boston, Massachusetts June 29, 1999
1 EXHIBIT 99.4 RAYTHEON SAVINGS AND INVESTMENT PLAN FOR PUERTO RICO BASED EMPLOYEES FINANCIAL STATEMENTS TO ACCOMPANY 1998 FORM 5500 ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN UNDER ERISA OF 1974 for the Year ended December 31, 1998 The supplemental schedules to the Plan's Form 5500 are not required since the Plan's assets are held in a Master Trust. Accordingly, the Plan administrator must file detailed financial information, including the supplemental schedules, separately with the Department of Labor.
2 Report of Independent Accountants To the Participants and Administrator of the Raytheon Savings and Investment Plan for Puerto Rico Based Employees In our opinion, the accompanying statements of net assets available for plan benefits and the related statement of changes in net assets available for plan benefits present fairly, in all material respects, the net assets available for benefits of the Raytheon Savings and Investment Plan for Puerto Rico Based Employees (the "Plan") at December 31, 1998 and 1997, and the changes in net assets available for benefits for the year ended December 31, 1998 in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. PricewaterhouseCoopers LLP Boston, Massachusetts June 4, 1999
3 RAYTHEON SAVINGS AND INVESTMENT PLAN FOR PUERTO RICO BASED EMPLOYEES STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS as of December 31, 1998 and 1997 1998 1997 Assets: Master trust investments: At contract value (Notes B, E and H) $ 89,386 $ 77,879 At fair value (Notes B, F and H) 1,175,199 700,111 ----------- ---------- 1,264,585 777,990 ----------- ---------- Receivables: Accrued investment income and other receivables 2,417 1,775 Cash and cash equivalents 13,742 5,598 ----------- ---------- Total assets 1,280,744 785,363 ----------- ---------- Liabilities: Payable for outstanding purchases 776 1,723 Accrued expenses and other payables 1,019 696 ----------- ---------- Total liabilities 1,795 2,419 ----------- ---------- Net assets available for plan benefits $ 1,278,949 $ 782,944 =========== ========== The accompanying notes are an integral part of the financial statements.
4 RAYTHEON SAVINGS AND INVESTMENT PLAN FOR PUERTO RICO BASED EMPLOYEES STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS for the year ended December 31, 1998 Additions to net assets attributable to: Investment income (Notes B, E and H): Net appreciation of investments $ 209,437 Interest & Dividends 34,823 ---------- 244,260 Contributions and deferrals: Employee deferrals 239,993 Employer contributions 87,083 Transfers (Note G) 55,305 ---------- 382,381 ---------- Total additions 626,641 ---------- Deductions from net assets attributable to: Distributions to participants 100,711 Administrative expenses 68 Transfers (Note G) 29,857 ---------- Total deductions 130,636 ---------- Increase in net assets 496,005 Net assets, beginning of year 782,944 ---------- Net assets, end of year $1,278,949 ========== The accompanying notes are an integral part of the financial statements.
5 RAYTHEON SAVINGS AND INVESTMENT PLAN FOR PUERTO RICO BASED EMPLOYEES NOTES TO FINANCIAL STATEMENTS A. Description of Plan: General The following description of the Raytheon Savings and Investment Plan for Puerto Rico Based Employees (the "Plan") provides only general information. Participants should refer to the plan document for a complete description of the Plan's provisions. The Plan is a defined contribution plan covering certain Puerto Rico based employees of Raytheon Catalytic, Inc., a wholly owned subsidiary of Raytheon Company (the "Company"). To participate in the Plan, eligible employees must have three months of service and may enter the Plan only on the first pay date of each month. The purpose of the Plan is to provide participants with a tax-effective means of meeting both short- and long-term investment objectives. The Plan, effective as of January 1, 1995, is intended to comply with all the requirements for a "qualified profit sharing plan" under the Revenue Code of Puerto Rico (the "Code"). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). All of the Plan's investments are combined with the investments of other similar defined contribution plans of Raytheon Company into the Raytheon Company Master Trust for Defined Contribution Plans ("Master Trust"). The trustee of the Master Trust maintains a separate account reflecting the equitable share in the Trust of each plan. Investment income and administrative expenses relating to the Master Trust are allocated to the individual plans based upon average monthly balances invested by each plan. Contributions and Deferrals Eligible employees are allowed to defer to the Plan up to 15% of their salaries. The Company contributes amounts equal to 50% of each participant's deferral, up to a maximum of 3% of the participant's salary. For 1998, the annual employee deferral for a participant cannot exceed the lesser of $8,000 or 10% of a participant's annual compensation, minus any contributions to Puerto Rico qualified Individual Retirement Accounts. Rollover contributions from other qualified plans subject to the Code are accepted by the Plan. Participants may invest their deferrals in increments of 1% in any combination of seven funds: (a) a Fixed Income Fund under which assets are invested primarily in contracts providing for fixed rates of interest for specified periods of time, (b) the Fidelity Equity Income Fund which invests in shares of a mutual fund consisting primarily of income-producing equity securities, (c) a Raytheon Common Stock Fund which invests in shares of Raytheon Company common stock, (d) a Stock Index Fund which invests in a commingled pool consisting primarily of equity securities and is designed to track the S&P 500 Index, (e) the Fidelity Balanced Fund which invests in shares of a mutual fund consisting primarily of equity securities, bonds and money market instruments, (f) the Fidelity Magellan Fund, a growth fund which invests primarily in equities of companies of all types and sizes, and (g) the Fidelity Blue Chip Fund, a growth fund which invests primarily in equities of well known and established companies. Dividends and distributions from investments of the Fidelity Equity Income Fund, the Raytheon Common Stock Fund, the Stock Index Fund, the Fidelity Balanced Fund, the Fidelity Magellan Fund and the Fidelity Blue Chip Fund are reinvested in their respective funds; stock dividends, stock splits and similar changes are also reflected in the funds.
6 Participant Accounts Each participant's account is credited with the participant's deferral, the Company's contributions and an allocation of plan earnings. Plan earnings are allocated based on account balances by fund. Vesting Participants are immediately vested in their voluntary deferrals plus actual earnings thereon. Vesting requirements for employer contributions plus earnings thereon may vary depending upon when an employee became eligible to participate in the Plan. Vesting generally occurs upon completion of five years of service or after 3 years of participation or upon retirement, death, disability, or attainment of retirement age. Forfeitures of the nonvested portions of terminated participants' accounts are used to reduce required contributions of the Company. Distributions to Participants A participant may withdraw all or a portion of deferrals, employer contributions and related earnings upon attainment of age 59 1/2. For reasons of financial hardship, as defined in the plan document, a participant may withdraw all or part of deferrals. On termination of employment, a participant will receive a lump-sum distribution. If the vested account is valued in excess of $3,500, the participant has the option to defer distribution. A retiree or a beneficiary of a deceased participant may defer the distribution until January of the year following attainment of age 65. Loans to Participants A participant may borrow against a portion of the balance in the participant's account, subject to certain restrictions. The maximum amount of a loan is one-half of the participant's account balance. The minimum loan which may be granted is $500. The interest rate applied is equal to the prime rate published in the Wall Street Journal on the first business day in June and December of each year. Loans must be repaid over a period of up to five years by means of payroll deductions. In certain cases, the repayment period may be extended up to 15 years. Interest paid to the Plan on loans to participants is credited to the borrower's account in the investment fund to which repayments are made. Administrative Expenses Certain expenses of administering the Plan are paid by the plan participants.
7 B. Summary of Significant Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting. The Plan's investment contracts are fully benefit-responsive and are therefore included in the financial statements at their contract value, defined as net contributions and deferrals plus interest earned on the underlying investments at contracted rates. Contract value approximates fair value. Investments in mutual funds and the commingled pool are valued at the closing net asset value reported on the last business day of the year. Investments in securities (common stocks) traded on a national securities exchange are valued at the last reported sales price on the last business day of the year. Cash equivalents are short-term money market instruments and are valued at cost, which approximates fair value. Participant loans are valued at cost, which approximates fair value. Security transactions are recorded on the trade date. Except for its investment contracts (Note E), the Plan's investments are held by bank-administered trust funds. Payables for outstanding security transactions represent trades which have occurred but have not yet settled. The Plan presents in the statement of changes in net assets the net appreciation (depreciation) in the fair value of its investments, which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. Dividend income is recorded on the ex-dividend date. Income from other investments is recorded as earned on an accrual basis. Investment income includes both dividend and interest income. Benefits are recorded when paid. Certain items in the 1997 financial statements have been reclassified to conform to the 1998 presentation. The preparation of the financial statements in conformity with generally accepted accounting principles requires the Plan administrator to make significant estimates and assumptions that affect the reported amounts of net assets and liabilities available for benefits at the date of the financial statements and the changes in net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from the estimates included in the financial statements.
8 The Plan provides for various investment options in any combination of stocks, bonds, fixed income securities, mutual funds and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the statement of net assets available for plan benefits and the statement of changes in net assets available for plan benefits. C. Tax Status: The Plan obtained its latest determination letter in August 1996, in which the Treasury department of the Commonwealth of Puerto Rico stated that the Plan, as submitted, was in compliance with the applicable requirements of the Puerto Rico Income Tax Act of 1954, as amended. Since receiving the determination letter, the plan has been amended. The Plan administrator and the Plan's legal counsel believe that the Plan is designed and being operated in compliance with the applicable requirements of the aforementioned Act. Therefore, no provision for income taxes has been included in the Plan's financial statements. D. Plan Termination: Although it has not expressed any intention to do so, the Company reserves the right under the Plan at any time or times to discontinue its contributions and to terminate the Plan subject to the provisions of ERISA. In the event of plan termination, after payment of all expenses and proportional adjustment of accounts to reflect such expenses, fund losses or profits, and reallocations, each participant shall be entitled to receive any amounts then credited to his or her account. E. Investment Contracts: The Plan invests in collateralized fixed income investment portfolios which are managed by insurance companies and investment management firms. The credited interest rates are adjusted semiannually to reflect the experienced and anticipated yields to be earned on such investments, based on their book value. The annualized average yield and credited interest rates were as follows:
9 Annualized Credited Average Yield Interest Rate For the year ended December 31, 1998: Banker's Trust (WBS 92-485) 6.85% 6.85% Metropolitan Life Insurance Company (GIC GA-12908) 6.58% 6.58% Metropolitan Life Insurance Company (GIC GA-13659) 6.10% 6.10% Prudential Asset Management Company (GIC 917163-001) 6.75% 6.75% Connecticut General (GIC 0025174) 5.58% 5.58% Fidelity IPL (633-GCDC) 5.62% 5.62% Monumental Life Insurance Company (GIC BDA00463FR-00) 7.84% 7.84% For the year ended December 31, 1997: Banker's Trust (WBS 92-485) 6.95% 6.95% Metropolitan Life Insurance Company (GIC GA-12908) 6.86% 6.86% Metropolitan Life Insurance Company (GIC GA-13659) 6.43% 6.43% Prudential Asset Management Company (GIC 917163-001) 6.99% 6.99% The contract values are subject to limitations in certain situations including large workforce reductions and plan termination. In the financial statements the two Metropolitan Life Insurance Company contracts are recorded as one investment option. F. Related Party Transactions: The Plan's trustee is Fidelity Management Trust Company (the "Trustee"). The Trustee holds the funds for the Plan and is responsible for managing the Plan's investment assets, executing all investment transactions, recording approved transactions, and, therefore these transactions qualify as party-in-interest. In accordance with the provisions of the Plan, the "Trustee" acts as the Plan's agent for purchases and sales of shares of Raytheon Company common stock. These transactions are performed on a Master Trust level. For the Master Trust, purchases amounted to $288,116,995 and sales amounted to $257,878,566 for the year ended December 31, 1998. G. Transfers: Transfers include transfers of participant accounts, individually and/or in-groups, between the Plan and all other plans included in the Raytheon Company Master Trust for those participants and/or groups of participants who changed plans during the year. Transfers also include transfers of participant accounts, individually and/or in-groups, between the Plan and similar savings plans of other companies for those participants who changed companies during the year.
10 H. Fund Data: The following is a summary of net assets available for plan benefits by fund as of December 31, 1998: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Blue Chip Fund Fund Stock Fund Fund Fund Fund Fund Assets: Master trust investments: At contract value: Bankers Trust $ 31,468 Prudential Insurance Company of America 15,758 Metropolitan Life Insurance Company 39,552 Fidelity 1,716 Connecticut General 435 Monumental Life Insurance Company 457 At fair value: Fidelity Equity Income Fund* $ 287,340 Raytheon Company Common Stock Fund* $ 321,152 BT Pyramid Equity Index Fund* $ 241,676 Fidelity Balanced Fund $ 61,028 Fidelity Magellan Fund* $ 117,182 Fidelity Blue Chip Fund* $ 109,521 Loans receivable from participants ------------ ----------- ----------- ----------- ---------- ----------- ----------- Total investments 89,386 287,340 321,152 241,676 61,028 117,182 109,521 ------------ ----------- ----------- ----------- ---------- ----------- ----------- Receivables: Accrued investment income and other receivables 1,907 510 Cash and cash equivalents 8,243 4,420 1,079 ------------ ----------- ----------- ----------- ----------- ------------ ----------- Total assets 97,629 287,340 327,479 243,265 61,028 117,182 109,521 ------------ ----------- ----------- ----------- ----------- ------------ ----------- Liabilities: Payable for outstanding purchases 776 Accrued expenses and other payables 745 274 ------------ ----------- ----------- ----------- ---------- ----------- ----------- Total liabilities - - 1,521 274 - - - ------------ ----------- ----------- ----------- ---------- ----------- ----------- Net assets available for plan benefits $ 97,629 $ 287,340 $ 325,958 $ 242,991 $ 61,028 $ 117,182 $ 109,521 ============ =========== =========== ========== =========== =========== ===========
11 Loan Fund Total Assets: Master trust investments: At contract value: Bankers Trust $ 31,468 Prudential Insurance Company of America 15,758 Metropolitan Life Insurance Company 39,552 Fidelity 1,716 Connecticut General 435 Monumental Life Insurance Company 457 At fair value: Fidelity Equity Income Fund* 287,340 Raytheon Company Common Stock Fund* 321,152 BT Pyramid Equity Index Fund* 241,676 Fidelity Balanced Fund 61,028 Fidelity Magellan Fund* 117,182 Fidelity Blue Chip Fund* 109,521 Loans receivable from participants $ 37,300 37,300 ----------- ------------ Total investments 37,300 1,264,585 ----------- ------------ Receivables: Accrued investment income and other receivables 2,417 Cash and cash equivalents 13,742 ----------- ------------ Total assets 37,300 1,280,744 ----------- ------------ Liabilities: Payable for outstanding purchases 776 Accrued expenses and other payables 1,019 ---------- ------------ Total liabilities - 1,795 ---------- ------------ Net assets available for plan benefits $ 37,300 $ 1,278,949 ========== ============
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 Equity Common Stock Balanced Magellan Income Fund Fund Stock Fund Index Fund Fund Fund Assets: Master trust investments: At contract value: Bankers Trust $ 29,087 Prudential Insurance Company of America 18,041 Metropolitan Life Insurance Company 30,751 At fair value: Fidelity Equity Income Fund* $ 214,116 Raytheon Company Common Stock Fund* $ 202,655 BT Pyramid Equity Index Fund* $ 118,530 Fidelity Balanced Fund $ 32,784 Fidelity Magellan Fund* $ 40,215 Fidelity Blue Chip Fund* Loans receivable from participants* ------------ ----------- ----------- ----------- ---------- ---------- Total investments 77,879 214,116 202,655 118,530 32,784 40,215 ------------ ----------- ----------- ----------- ---------- ---------- Receivables: Accrued investment income and other receivables 1,491 284 Cash and cash equivalents 767 3,667 1,164 ------------ ----------- ----------- ----------- ---------- ---------- Total assets 78,646 214,116 207,813 119,978 32,784 40,215 ------------ ----------- ----------- ----------- ---------- ---------- Liabilities: Payable for outstanding purchases 1,723 Accrued expenses and other payables 402 294 ------------ ----------- ----------- ---------- ----------- ---------- Total liabilities 2,125 294 ------------ ----------- ----------- ---------- ----------- ---------- Net assets available for plan benefits $ 78,646 $ 214,116 $ 205,688 $ 119,684 $ 32,784 $ 40,215 ============ =========== =========== =========== ========== ========== *Represents more than 5% of net assets available for plan benefits
13 Blue Chip Loan Fund Fund Total Assets: Master trust investments: At contract value: Bankers Trust $ 29,087 Prudential Insurance Company of America 18,041 Metropolitan Life Insurance Company 30,751 At fair value: Fidelity Equity Income Fund* 214,116 Raytheon Company Common Stock Fund* 202,655 BT Pyramid Equity Index Fund* 118,530 Fidelity Balanced Fund 32,784 Fidelity Magellan Fund* 40,215 Fidelity Blue Chip Fund* $ 35,416 35,416 Loans receivable from participants* $ 56,395 56,395 ---------- ----------- ----------- Total investments 35,416 56,395 777,990 ---------- ----------- ------------ Receivables: Accrued investment income and other receivables 1,775 Cash and cash equivalents 5,598 ---------- ----------- ------------ Total assets 35,416 56,395 785,363 ---------- ----------- ------------ Liabilities: Payable for outstanding purchases 1,723 Accrued expenses and other payables 696 ---------- ---------- ------------ Total liabilities 2,419 ---------- ---------- ------------ Net assets available for plan benefits $ 35,416 $ 56,395 $ 782,944 ========== =========== ============ *Represents more than 5% of net assets available for plan benefits
14 The following is a summary of changes in net assets available for plan benefits by fund for the year ended December 31, 1998: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Additions to net assets attributable to: Investment income: Net appreciation (depreciation) of investments $ (1,958) $ 22,738 $ 73,332 $ 63,126 $ 7,302 $ 23,815 Interest & Dividends 6,004 14,922 3,475 4,462 ----------- ------------ ----------- ------------ ------------ ------------ 4,046 37,660 73,332 63,126 10,777 28,277 ----------- ------------ ----------- ------------ ------------ ------------ Contributions and deferrals: Employee deferrals 18,843 47,068 57,329 43,191 7,832 30,821 Employer contributions 26,493 13,859 18,635 11,718 1,788 7,816 Transfers 12,894 (3,898) 12,411 18,172 7,752 ------------ ------------ ----------- ------------ ----------- ------------ 45,336 73,821 72,066 67,320 27,792 46,389 ------------ ------------ ----------- ------------ ------------ ------------ Total additions 49,382 111,481 145,398 130,446 38,569 74,666 ------------ ------------ ----------- ------------ ------------ ------------ Deductions from net assets attributable to: Distributions to participants 17,064 11,869 24,719 14,451 2,156 5,996 Administrative expenses 7 19 20 11 3 4 Transfers 13,295 ------------ ------------ ----------- ------------ ------------- ------------ Total deductions 17,071 25,183 24,739 14,462 2,159 6,000 ------------ ------------ ----------- ------------ ------------- ------------ Interfund transfers (13,328) (13,074) (389) 7,323 (8,166) 8,301 ------------ ------------ ----------- ------------ ------------- ------------ Increase/(Decrease) in net assets 18,983 73,224 120,270 123,307 28,244 76,967 Net assets, beginning of year 78,646 214,116 205,688 119,684 32,784 40,215 ------------ ------------ ----------- ------------ ------------- ------------ Net assets, end of year $ 97,629 $ 287,340 $ 325,958 $ 242,991 $ 61,028 $ 117,182 ============ ============ =========== ============ ============= ============
15 Blue Chip Loan Fund Fund Total Additions to net assets attributable to: Investment income: Net appreciation of investments $ 21,082 $ 209,437 Interest & Dividends 3,285 $ 2,675 34,823 ---------- ------------ ------------- 24,367 2,675 244,260 ---------- ------------ ------------- Contributions and deferrals: Employee deferrals 34,909 239,993 Employer contributions 6,774 87,083 Transfers 7,974 55,305 ---------- ------------ ------------- 49,657 382,381 ---------- ------------ ------------- Total additions 74,024 2,675 626,641 ---------- ------------ ------------- Deductions from net assets attributable to: Distributions to participants 2,639 21,817 100,711 Administrative expenses 4 - 68 Transfers 16,562 29,857 ---------- ------------ -------------- Total deductions 2,643 38,379 130,636 ---------- ------------ -------------- Interfund transfers 2,724 16,609 ----------- ------------ -------------- Increase/(Decrease) in net assets 74,105 (19,095) 496,005 Net assets, beginning of year 35,416 56,395 782,944 ----------- ----------- -------------- Net assets, end of year $ 109,521 $ 37,300 $ 1,278,949 =========== =========== ==============
16 J. Master Trust: All plan investments are included under the Master Trust. At December 31, 1998, assets of the Plan represented 0.02% of the total assets under the Master Trust. This has not changed from 0.02% at December 31, 1997. The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1998: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $ 473,258,791 Prudential Life Insurance Company of America 236,989,116 Metropolitan Life Insurance Company* 594,847,154 Fidelity 25,803,449 Connecticut General 6,538,482 Monumental Life Insurance Company 6,869,338 At fair value: Fidelity Equity Income Fund* $1,464,615,296 Raytheon Company Common Stock Fund* $ 799,542,751 BT Pyramid Equity Index Fund* $ 745,602,791 Fidelity Balanced Fund* $ 442,796,289 Fidelity Magellan Fund* $ 379,680,454 Fidelity Blue Chip Fund* Templeton Foreign I Fund Fidelity Investment Grade Bond Fund Fidelity Retirement Money Market Vanguard Winsor Vanguard Wellesley TRP Small Cap Stock Raytheon Class A Wasting Stock Fund Raytheon GMH Wasting Stock Fund Loans receivable from participants -------------- -------------- -------------- -------------- -------------- -------------- Total investments 1,344,306,330 1,464,615,296 799,542,751 745,602,791 442,796,289 379,680,454 -------------- -------------- -------------- -------------- -------------- -------------- Receivables: Employer contribution Accrued investment income and other receivables 4,748,948 1,573,604 Transfer receivables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803 Cash and cash equivalents 123,969,201 11,004,025 3,330,147 -------------- -------------- -------------- -------------- -------------- -------------- Total assets 2,048,537,201 2,226,757,712 1,255,380,751 967,248,229 755,173,618 616,369,257 -------------- -------------- -------------- -------------- -------------- -------------- Liabilities: Payable for outstanding purchases 1,932,125 Accrued expenses and other payables 1,853,618 844,977 Transfer payables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803 -------------- -------------- -------------- -------------- -------------- -------------- Total liabilities 580,261,670 762,142,416 443,870,770 217,586,664 312,377,329 236,688,803 -------------- -------------- -------------- -------------- -------------- -------------- Net assets available for plan benefits $1,468,275,531 $1,464,615,296 $ 811,509,981 $ 749,661,565 $ 442,796,289 $ 379,680,454 ============== ============== ============== ============== ============== ==============
17 Templeton Investment Retirement Vanguard Vanguard Blue Chip Foreign I Grade Money Winsor Wellesley Fund Fund Bond Fund Market Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* Prudential Life Insurance Company of America Metropolitan Life Insurance Company* Fidelity Connecticut General Monumental Life Insurance Company At fair value: Fidelity Equity Income Fund* Raytheon Company Common Stock Fund* BT Pyramid Equity Index Fund* Fidelity Balanced Fund* Fidelity Magellan Fund* Fidelity Blue Chip Fund* $ 391,787,509 Templeton Foreign I Fund $ 6,966,704 Fidelity Investment Grade Bond Fund $ - Fidelity Retirement Money Market $ 13,202,524 Vanguard Winsor $ 41 Vanguard Wellesley $ 18 TRP Small Cap Stock Raytheon Class A Wasting Stock Fund Raytheon GMH Wasting Stock Fund Loans receivable from participants -------------- -------------- -------------- ------------- ------------- -------------- Total investments 391,787,509 6,966,704 - 13,202,524 41 18 Receivables: Employer contribution 3,595,261 Accrued investment income and other receivables Transfer receivables 191,269,141 6,966,652 16,715,590 Cash and cash equivalents -------------- -------------- -------------- ------------- ------------- -------------- Total assets 583,056,650 13,933,356 - 33,513,375 41 18 -------------- -------------- -------------- ------------- ------------- -------------- Liabilities: Payable for outstanding purchases Accrued expenses and other payables Transfer payables 191,269,141 6,966,652 16,715,590 -------------- -------------- -------------- ------------- ------------- -------------- Total liabilities 191,269,141 6,966,652 - 16,715,590 - - -------------- -------------- -------------- ------------- ------------- -------------- Net assets available for plan benefits $ 391,787,509 $ 6,966,704 $ - $ 16,797,785 $ 41 $ 18 ============== ============== ============== ============== ============== ==============
18 TRP Small RTN.A GMH Cap Stock Wasting Wasting Loan Fund Fund Fund Fund Other(1) Total Assets: Investments: At contract value: Bankers Trust* $ 473,258,791 Prudential Life Insurance Company of America 236,989,116 Metropolitan Life Insurance Company* 594,847,154 Fidelity 25,803,449 Connecticut General 6,538,482 Monumental Life Insurance Company 6,869,338 At fair value: Fidelity Equity Income Fund* 1,464,615,296 Raytheon Company Common Stock Fund* 799,542,751 BT Pyramid Equity Index Fund* 745,602,791 Fidelity Balanced Fund* 442,796,289 Fidelity Magellan Fund* 379,680,454 Fidelity Blue Chip Fund* 391,787,509 Templeton Foreign I Fund 6,966,704 Fidelity Investment Grade Bond Fund - Fidelity Retirement Money Market 13,202,524 Vanguard Winsor 41 Vanguard Wellesley 18 TRP Small Cap Stock $ 348 348 Raytheon Class A Wasting Stock Fund $ 116,129,149 116,129,149 Raytheon GMH Wasting Stock Fund $ 172,859,819 172,859,819 Loans receivable from participants $ 250,687,865 250,687,865 -------------- -------------- -------------- -------------- ------------- -------------- Total investments 348 116,129,149 172,859,819 250,687,865 - 6,128,177,888 -------------- -------------- -------------- -------------- ------------- -------------- Receivables: Employer contribution 3,595,261 Accrued investment income and other receivables 1,193,397 23,640 7,539,589 Transfer receivables 120,761,325 178,295,618 117,046,618 $ 855,826,675 4,035,178,551 Cash and cash equivalents 3,480,490 5,474,220 147,258,083 -------------- -------------- -------------- ------------- -------------- -------------- Total assets 348 241,564,361 356,653,297 367,734,483 855,826,675 10,321,749,372 -------------- -------------- -------------- ------------- -------------- -------------- Liabilities: Payable for outstanding purchases 1,932,125 Accrued expenses and other payables 41,711 62,061 2,802,367 Transfer payables 120,761,325 178,295,618 117,046,618 3,179,351,876 -------------- -------------- -------------- ------------- -------------- -------------- Total liabilities - 120,803,036 178,357,679 117,046,618 - 3,184,086,368 -------------- -------------- -------------- ------------- -------------- -------------- Net assets available for plan benefits $ 348 $120,761,325 $ 178,295,618 $ 250,687,865 $ 855,826,675 $7,137,663,004 ============== ============== ============== ============== ============== ============== Percentage of Master Trust that are Plan assets - 0.02% *Represent more than 5% of net assets available for plan benefits (1) Other represents Raytheon plans merging in from outside the Master Trust. Note: Not all funds within the Master Trust are available options to participants in the Plan.
19 J. Master Trust, Continued: The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1997: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $351,035,073 Prudential Life Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* $782,799,011 Raytheon Company Common Stock Fund* $745,980,294 BT Pyramid Equity Index Fund* $484,781,406 Fidelity Balanced Fund $117,556,481 Fidelity Magellan Fund $91,863,155 Fidelity Blue Chip Fund Templeton Foreign I Fund Fidelity Investment Grade Bond Fund Fidelity Retirement Money Market Fund Loans receivable from participants ------------ ------------ ------------ ------------ ------------ ----------- Total investments 939,889,852 782,799,011 745,980,294 484,781,406 117,556,481 91,863,155 ------------ ------------ ------------ ------------ ------------ ----------- Receivables: Employer contribution Accrued investment income and other receivables 5,489,592 1,161,112 Cash and cash equivalents 9,232,100 13,498,051 4,761,268 ------------ ------------ ------------ ------------ ------------ ----------- Total assets 949,121,952 782,799,011 764,967,937 490,703,786 117,556,481 91,863,155 ------------ ------------ ------------ ------------ ------------ ----------- Liabilities: Payable for outstanding purchases 6,340,318 Accrued expenses and other payables 1,480,875 1,200,471 ------------- ------------ ------------ ------------ ------------ ----------- Total liabilities - - 7,821,193 1,200,471 - - ------------- ------------ ------------ ------------ ------------ ----------- Net assets available for plan benefits $949,121,952 $782,799,011 $757,146,744 $489,503,315 $117,556,481 $91,863,155 ============ ============ ============ ============ ============ ===========
20 Templeton Investment Retirement Blue Chip Foreign I Grade Money Loan Fund Fund Bond Fund Market Fund Fund Total Assets: Investments: At contract value: Bankers Trust* $351,035,073 Prudential Life Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* 782,799,011 Raytheon Company Common Stock Fund* 745,980,294 BT Pyramid Equity Index Fund* 484,781,406 Fidelity Balanced Fund 117,556,481 Fidelity Magellan Fund 91,863,155 Fidelity Blue Chip Fund $136,586,123 136,586,123 Templeton Foreign I Fund $5,471,176 5,471,176 Fidelity Investment Grade Bond Fund $1,548,125 1,548,125 Fidelity Retirement Money Market Fund $12,186,085 12,186,085 Loans receivable from participants $166,395,767 166,395,767 ------------ ---------- ---------- ----------- ------------ ------------- Total investments 136,586,123 5,471,176 1,548,125 12,186,085 166,395,767 3,485,057,475 ------------ ---------- ---------- ----------- ------------ -------------- Receivables: Employer contribution 4,015,100 4,015,100 Accrued investment income and other receivables 6,650,704 Cash and cash equivalents 27,491,419 ------------ ---------- ---------- ----------- ------------ -------------- Total assets 136,586,123 5,471,176 1,548,125 16,201,185 166,395,767 3,523,214,698 Liabilities: Payables for outstanding purchases 6,340,318 Accrued expenses and other payables 2,681,346 ------------ ---------- ---------- ----------- ------------ -------------- Total liabilities - - - - - 9,021,664 ------------ ---------- ---------- ----------- ------------ -------------- Net assets available for plan benefits $136,586,123 $5,471,176 $1,548,125 $16,201,185 $166,395,767 $3,514,193,034 ============ ========== ========== =========== ============ ============== Percentage of Master Trust that are Plan assets - 0.02% *Represent more than 5% of net assets available for plan benefits Note: Not all funds within the Master Trust are available options to participants in the Plan.
21 J. Master Trust, Continued: The following is a summary of investment income by fund under the Master Trust for the year ended December 31, 1998: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Investment income: Net appreciation (depreciation) of assets $ 30,695 $ 49,019,748 $74,202,083 $149,571,006 $16,091,158 $62,195,801 Interest & Dividends 81,886,632 86,279,682 1,792 42,537,357 13,255,763 ----------- ------------ ----------- ------------ ----------- ----------- Total investment income/(loss) $81,917,327 $135,299,430 $74,203,875 $149,571,006 $58,628,515 $75,451,564 =========== ============ =========== ============ =========== ===========
22 Templeton Investment Retirement Vanguard Vanguard Blue Chip Foreign I Grade Money Winsor Wellesley Fund Fund Bond Fund Market Fund Fund Fund Investment income: Net appreciation (depreciation) of assets $60,264,181 $(1,095,980) $ 17,635 $2,864,378 $1,379,950 Interest & Dividends 13,550,491 752,610 162,858 $ 349,740 ----------- ----------- -------- ---------- ---------- ---------- Total investment income/(loss) $73,814,672 $ (343,370) $180,493 $ 349,740 $2,864,378 $1,379,950 =========== =========== ======== ========== ========== ==========
23 TRP Small RTN.A GMH Cap Stock Wasting Wasting Loan Fund Fund Fund Fund Total Investment income: Net appreciation (depreciation) of assets $ 15 $ (35,268) $44,604,025 $459,109,427 Interest & Dividends $15,334,403 254,111,328 ----------- ---------- ----------- ----------- ------------ Total investment income/(loss) $ 15 $ (35,268) $44,604,025 $15,334,403 $713,220,746 =========== ========== =========== =========== ============
1 EXHIBIT 99.4a CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (File No. 333-56117) of Raytheon Company of our report dated June 4, 1999 relating to the financial statements of the Raytheon Savings and Investment Plan for Puerto Rico Based Employees, which appears in this Form 10-K/A. PricewaterhouseCoopers LLP Boston, Massachusetts June 29, 1999
1 EXHIBIT 99.5 E-SYSTEMS, INC. EMPLOYEE SAVINGS PLAN FINANCIAL STATEMENTS TO ACCOMPANY 1998 FORM 5500 ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN UNDER ERISA OF 1974 FOR THE YEAR ENDED DECEMBER 31, 1998 Certain supplemental schedules that are required by the Employee Retirement Income Security Act of 1974 (ERISA) are not presented because they are not applicable.
2 Report of Independent Accountants To the Participants and Administrator of the E-Systems, Inc. Employee Savings Plan: In our opinion, the accompanying statements of net assets available for plan benefits and the related statement of changes in net assets available for plan benefits present fairly, in all material respects, the net assets available for benefits of The E-Systems, Inc. Employee Savings Plan (the "Plan") at December 31, 1998 and 1997, and the changes in net assets available for benefits for the year ended December 31, 1998 in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of Reportable Transactions is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. As discussed in Notes A and G to the financial statements, the Board of Directors of Raytheon Company voted on December 16, 1998, to merge the Plan into the Raytheon Savings and Investment Plan. PricewaterhouseCoopers LLP Boston, Massachusetts June 4, 1999
3 E-SYSTEMS, INC. EMPLOYEE SAVINGS PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS December 31, 1998 and 1997 ASSETS 1998 1997 Investments--at fair value: Mutual funds $633,702,737 $613,860,560 Collective investment fund 57,431,843 61,180,556 Raytheon common stock fund 31,793,467 35,787,508 Participant loans 21,561,171 22,992,597 ------------ ------------ 744,489,218 733,821,221 ------------ ------------ Receivables: Employee contributions 798 2,135,509 Employer contributions 755 9,520,806 Other 2,585 ------------ ------------ Total assets 744,493,356 745,477,536 ------------ ------------ Liabilities: Transfer payables (Note G) 744,493,356 ------------ ------------ Total liabilities 744,493,356 - ------------ ------------ Net assets available for benefits $ - $745,477,536 ============ ============ The accompanying notes are an integral part of the financial statements.
4 E-SYSTEMS, INC. EMPLOYEE SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS for the year ended December 31, 1998 1998 Additions to net assets attributable to: Investment income (Notes B, E and H): Net appreciation of investments $ 38,648,777 Interest & dividends 46,828,458 ------------- 85,477,235 Contributions and deferrals: Employee deferrals 50,750,177 Employer contributions 8,219,008 Transfers (Note F) 100,188 ------------- 59,069,373 Total additions 144,546,608 ------------- Deductions from net assets attributable to: Distributions to participants 145,309,738 Administrative expenses 117,034 Transfers (Note F and G) 744,597,372 ------------- Total deductions 890,024,144 ------------- Decrease in net assets (745,477,536) Net assets, beginning of year 745,477,536 ------------- Net assets, end of year $ 0 ============= The accompanying notes are an integral part of the financial statements.
5 E-SYSTEMS, INC. EMPLOYEE SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS A. Description of Plan: General As more fully described in Note G, the E-Systems Inc. Employee Savings Plan (the "Plan") ceased to exist as of December 31, 1998 and effective January 1, 1999, the Plan was merged into the Raytheon Savings and Investment Plan (RAYSIP). The following description of the Plan provides only general information that is applicable through December 31, 1998. A detailed description of the Plan is contained in the Plan document. The Plan is a defined contribution plan sponsored by Raytheon E-Systems, Inc. ("E-Systems" or the "Company"), a wholly owned subsidiary of Raytheon Company, which became effective January 1, 1995. Employees are immediately eligible to participate in the Plan. The Plan provides an individual account for each participant. Amounts disbursed to participants or transfers between funds are based solely upon amounts contributed to each participant's account adjusted to reflect any withdrawals and distributions, investment earnings attributable to such fund balances and appreciation or depreciation of the market value of the fund. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). Contributions and Deferrals Eligible employees are allowed to defer to the Plan up to 10% of their salaries. The Company contributes amounts equal to 50% of each participant's deferral, up to a maximum of 3% of the participant's salary. For 1998, the annual employee deferral for a participant cannot exceed $10,000. Rollover contributions from other qualified plans are accepted by the Plan. The Plan also provides for Regular Discretionary Employer Contributions ("E-CAP") up to 1-1/2% of the lesser of (1) base rate of pay, or (2) W-2 pay plus elected reductions. To be eligible for this contribution, the participant must be an active employee on December 31. Certain Company subsidiaries may make Optional Employer Contributions. If employed by one of these subsidiaries on December 31, the participants receives an allocation equal to a certain percentage, determined by the Board of Directors of Raytheon Company, of the lesser of (1) base rate of pay, or (2) W-2 pay plus elected reductions. Employee contributions are invested by the trustee as directed by participants and can be invested in any combination of the funds listed below. Company matching contributions, and other discretionary contributions, if any may be invested in a different combination of funds than the employee contributions. If a separate election for the Company contributions is not made by the participant, these contributions are then invested in the same fund or funds selected by the participant for their pre-tax contributions.
6 Participants have the option of investing their contributions in any of the following funds: The Vanguard Retirement Savings Trust: investments seek the highest level of current income consistent with safety and stability of principal by investing primarily in contracts issued by life insurance companies, investment contracts issued by domestic commercial banks or United States branches of foreign banks, and other similar types of fixed-principal investments. The Trust may also hold no more than 15% of its assets in short-term obligations, money market funds, or federally insured deposits. The Vanguard/Morgan Growth Fund: investments consist primarily of common stocks of corporations with either established growth patterns, emergin growth potential, or cyclical growth deposits. The Vanguard/Windsor Fund: investments consist of a portfolio of common stocks, the objective of which is primarily long-term growth and secondly, current income through dividends. The Vanguard Money Market reserves Prime Portfolio: investments consist of high-quality money market instruments that mature in one year or less. The Vanguard Short-Term Corporate Bond Portfolio: investments consist of investment grade bonds with maturities from less than one to four years, including United States Treasury and agency obligations, the objective of which is primarily to conserve principal and secondly, to maximize current income. The Vanguard Index Trust 500 Portfolio: investments consist of a portfolio of stocks designed to match the performance of Standard & Poor's 500 Corporate stock Price Index. The Vanguard/Wellesley Income Fund: investments consist of about 60% in fixed-income securities and 40% in common stocks. The Fund objective is primarily current income through dividends, and secondly, moderate capital growth. The Vanguard International Value Portfolio: investments seek maximum long-term total return consistent with reasonable risk by investing in a diversified group of large and medium-sized companies based outside of the United States. Total return includes both income and capital appreciation. The Raytheon Common Stock Fund: investments consist of Raytheon Class B common stock. However, contributions may be invested in the Vanguard Money Market Reserves Prime Portfolio until a stock purchase is made. Participant Accounts Each participant's account is credited with the participant's deferral, the Company's contribution and an allocation of plan earnings. Plan earnings are allocated based on account balances by fund.
7 Vesting Participants are immediately 100% vested in their account balances derived from Company contributions, employee contributions and any amounts rolled over to the Plan from another eligible plan. Distributions to Participants A participant may withdraw all or a portion of deferrals, employer contributions and related earnings upon attainment of age 59 1/2. For reasons of financial hardship, as defined in the Plan document, a participant may withdraw all or a portion of deferrals. On termination of employment, a participant will receive a lump-sum distribution unless the vested account is valued in excess of $3,500 and the participant elects to defer distribution. A retiree or a beneficiary of a deceased participant may defer the distribution until January of the year following attainment of age 65. Loans to Participants A participant may borrow against a portion of the balance in the participant's account, subject to certain restrictions. The maximum amount of a loan is the lesser of one-half of the participant's vested account balance or $50,000. The minimum loan which may be granted is $500. The interest rate applied is equal to the prime rate published in the Wall Street Journal on the last business day of each quarter. Loans must be repaid over a period of up to 5 years by means of payroll deductions. In certain cases, the repayment period may be extended up to 15 years. Interest paid to the Plan on loans to participants is credited to the borrower's account in the investment fund to which repayments are made. Administrative Expenses Substantially all expenses of administering the Plan are paid by the plan participants. B. Summary of Significant Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting. The valuation of the Plans investments in all funds is based on the market value of the assets held in the funds. The Plan's relative interest in the funds is determined on a unit-method basis. The valuation of the Vanguard Funds is based on the closing market price of the assets which comprise the funds on the last business day of the Plan year. Investments in the Vanguard Retirement Savings Trust are carried at market value (which equals original cost plus accrued interest less any distribution). Contract value approximates market value. The valuation of Class B common stock in the Raytheon Common Stock Fund is based on closing market price as reported on the New York Stock Exchange on the last business day of the Plan year. Participant loans are valued at cost which approximates fair value.
8 Security transactions are recorded on trade date. Payables for outstanding security transactions represent trades which have occurred but have not yet settled. The Plan presents in the statement of changes in net assets the net appreciation (depreciation) in the fair value of its investments, which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. Dividend income is recorded on the ex-dividend date. Income from other investments is recorded as earned on an accrual basis. Investment income includes both dividend and interest income. Benefits are recorded when paid. The preparation of the financial statements in conformity with generally accepted accounting principles requires the Plan administrator to make significant estimates and assumptions that affect the reported amounts of net assets and liabilities available for benefits at the date of the financial statements and the change in net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from the estimates included in the financial statements. The Plan provides for various investment options in any combination of stocks, bonds, fixed income securities, mutual funds and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the statement of net assets available for plan benefits and the statement of changes in net assets available for plan benefits. C. Federal Income Tax Status: The Internal Revenue Service has determined and informed the Company by letter dated December 1996 that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code (the "Code"). The Plan has been amended since the determination letter. However, the Plan administrator and the Plan's legal counsel believe that the Plan is currently designed and being operated in compliance with applicable requirements of the Code. Therefore, no provision for income taxes has been included in the Plan's financial statements. D. Plan Termination: Although it has not expressed any intention to do so, the Company reserves the right under the Plan at any time or times to discontinue its contributions and to terminate the Plan subject to the provisions of ERISA. In the event of plan termination, amounts in participants' accounts will be distributed in a single lump sum; if the participant does not consent to an immediate distribution, the amount can be transferred to another defined contribution plan sponsored by the Company.
9 E. Related Party Transactions: The Plan's trustee is Vanguard Fiduciary Trust Company (the "Trustee"). The Trustee holds the funds for the Plan and is responsible for managing the Plan's investment assets, executing all investment transactions, recording approved transactions, and, therefore these transactions qualify as party-in-interest. In accordance with the provisions of the Plan, the Trustee acts as the Plan's agent for purchases and sales of Raytheon Company Common Stock. For the year ended December 31, 1998, purchases amounted to $14,712,663 and sales amounted to $20,317,082. F. Transfers: Transfers include transfers of participant accounts, individually and/or in-groups, between the Plan and other plans included in the Raytheon Company Master Trust for those participants, and/or groups of participants, who changed plans during the year. Transfers also include transfers of participant accounts, individually and/or in-groups, between the Plan and similar savings plans of other companies for those participants who changed companies during the year. G. Transfer Payables: As part of an overall effort to minimize plan design differences and increase administrative efficiencies, the Board of Directors of Raytheon Company voted on December 16, 1998 to merge the participants and their account balances from the Plan into the RAYSIP. Effective January 1, 1999, the plan provisions of the RAYSIP govern. The transfer payables represent a complete transfer of assets.
10 H. Net Assets Availiable for Plan Benefits by Fund: The following is a summary of net assets available for plan benefits by fund as of December 31, 1998: Raytheon Vanguard Vanguard Vanguard Vanguard Vanguard Common Retirement Morgan Growth Windsor Money Market Short Term Stock Fund Savings Trust Fund Fund Reserves Corporate Bond Assets: Investments at fair value: Mutual Funds $113,211,987 $179,362,915 $90,549,186 $17,953,500 Collective investment fund $57,431,843 Raytheon Common Stock Fund $31,793,467 Participant loans ----------- ----------- ------------ ------------ ----------- ----------- Total investments 31,793,467 57,431,843 113,211,987 179,362,915 90,549,186 17,953,500 ----------- ----------- ------------ ------------ ----------- ----------- Receivables: Employee contributions 588 131 (671) (469) 275 43 Employer contributions 186 54 82 151 80 17 Other receivables 595 168 150 404 775 67 ----------- ----------- ------------ ------------ ----------- ----------- Total assets 31,794,836 57,432,196 113,211,548 179,363,001 90,550,316 17,953,627 ----------- ----------- ------------ ------------ ----------- ----------- Liabilities: Transfer payables (Note G) 31,794,836 57,432,196 113,211,548 179,363,001 90,550,316 17,953,627 ----------- ----------- ------------ ------------ ----------- ----------- Total liabilities 31,794,836 57,432,196 113,211,548 179,363,001 90,550,316 17,953,627 ----------- ----------- ------------ ------------ ----------- ----------- Net assets available for plan benefits $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 =========== =========== ============ ============ =========== ===========
11 Vanguard Vanguard Vanguard Participant Index Trust Wellesley International Loan 500 Portfolio Income Fund Value Fund Total Assets: Investments at fair value: Mutual Funds $175,613,111 $41,019,572 $15,992,466 $633,702,737 Collective investment fund 57,431,843 Raytheon Common Stock Fund 31,793,467 Participant loans $21,561,171 21,561,171 ------------ ----------- ----------- ----------- ------------ Total investments 175,613,111 41,019,572 15,992,466 21,561,171 744,489,218 ------------ ----------- ----------- ----------- ------------ Receivables: Employee contributions 564 279 58 798 Employer contributions 135 32 18 755 Other receivables 364 11 51 2,585 ------------ ----------- ----------- ----------- ------------ Total assets 175,614,174 41,019,894 15,992,593 21,561,171 744,493,356 ------------ ----------- ----------- ----------- ------------ Liabilities: Transfer payables (Note G) 175,614,174 41,019,894 15,992,593 21,561,171 744,493,356 ------------ ----------- ----------- ----------- ------------ Total liabilities 175,614,174 41,019,894 15,992,593 21,561,171 744,493,356 ------------ ----------- ----------- ----------- ------------ Net assets available for plan benefits $ 0 $ 0 $ 0 $ 0 $ 0 ============ =========== =========== =========== ============
12 H. Net Assets Availiable for Plan Benefits by Fund: The following is a summary of net assets available for plan benefits by fund as of December 31, 1997: Raytheon * Vanguard* Vanguard* Vanguard* Vanguard* Vanguard Common Retirement Morgan Growth Windsor Money Market Short Term Stock Fund Savings Trust Fund Fund Reserves Corporate Bond Assets: Investments at fair value: Mutual Funds $97,914,498 $226,774,736 $91,047,417 $16,848,440 Collective investment fund $61,180,556 Raytheon Common Stock Fund $35,787,508 Participant loans ----------- ----------- ----------- ------------ ----------- ----------- Total investments 35,787,508 61,180,556 97,914,498 226,774,736 91,047,417 16,848,440 Receivables: Employee contributions 141,251 161,840 301,542 629,130 219,638 61,411 Employer contributions 1,597,516 225,700 905,920 1,566,103 2,542,782 142,667 Other Receivables ----------- ----------- ----------- ------------ ----------- ----------- Total assets 37,526,275 61,568,096 99,121,960 228,969,969 93,809,837 17,052,518 ----------- ----------- ----------- ------------ ----------- ----------- Liabilities: ----------- ----------- ----------- ------------ ----------- ----------- Total liabilities - - - - - - ----------- ----------- ----------- ------------ ----------- ----------- Net assets available for plan benefits $37,526,275 $61,568,096 $99,121,960 $228,969,969 $93,809,837 $17,052,518 =========== =========== =========== ============ =========== ===========
13 Vanguard* Vanguard Vanguard Participant Index Trust Wellesley International Loan 500 Portfolio Income Fund Value Fund Total Assets: Investments at fair value: Mutual Funds $134,265,332 $32,126,350 $14,883,787 $613,860,560 Collective investment fund 61,180,556 Raytheon Common Stock Fund 35,787,508 Participant loans $22,992,597 22,992,597 ------------ ----------- ----------- ----------- ------------ Total investments 134,265,332 32,126,350 14,883,787 22,992,597 733,821,221 Receivables: Employee contributions 434,798 109,353 76,546 2,135,509 Employer contributions 1,732,435 462,314 345,369 9,520,806 Other Receivables ------------ ----------- ----------- ----------- ------------ Total assets 136,432,565 32,698,017 15,305,702 22,992,597 745,477,536 ------------ ----------- ----------- ----------- ------------ Liabilities: ------------ ----------- ----------- ----------- ------------ Total liabilities - - - - - ------------ ----------- ----------- ----------- ------------ Net assets available for plan benefits $136,432,565 $32,698,017 $15,305,702 $22,992,597 $745,477,536 =========== =========== =========== =========== ============ *Represents more than 5% of net assets available for plan benefits
14 H. Changes in Net Assets Availiable for Plan Benefits by Fund: The following is a summary of changes in net assets available for plan benefits by fund as of December 31, 1998: Raytheon Vanguard Vanguard Vanguard Vanguard Vanguard Common Retirement Morgan Growth Windsor Money Market Short Term Stock Fund Savings Trust Fund Fund Reserves Corporate Bond Additions to net assets attributable to: Investment income Net appreciation (depreciation) $3,271,481 $12,070,155 ($16,306,145) $ 38,494 Interest & dividends 461,134 $ 3,816,141 9,102,200 17,415,762 $ 4,980,264 1,125,397 Contributions and transfers: Employee contributions 3,115,521 2,742,863 8,016,899 13,263,615 3,711,186 1,301,151 Employer contributions 596,771 560,049 1,206,693 2,229,943 763,562 231,953 Transfers (Note F and G) 439 39 598 986 204 37 ---------- ----------- ----------- ------------ ------------- ----------- Total additions 7,445,346 7,119,092 30,396,545 16,604,161 9,455,216 2,697,032 Deductions from net assets attributable to: Distributions to participants 3,859,905 17,094,278 16,579,289 34,765,672 22,270,456 3,464,245 Administrative expenses 12,228 3,329 14,525 24,010 25,207 2,725 Transfers (Notes F and G) 31,806,164 57,432,195 113,243,716 179,365,102 90,550,316 17,955,055 ---------- ----------- ----------- ------------ ----------- ----------- Total deductions 35,678,297 74,529,802 129,837,530 214,154,784 112,845,979 21,422,025 Interfund Transfers (9,293,324) 5,842,614 319,025 (31,419,346) 9,580,926 1,672,475 . Decrease in net assets (37,526,275) (61,568,096) (99,121,960) (228,969,969) (93,809,837) (17,052,518) ---------- ----------- ----------- ----------- ------------ ----------- Net assets, beginning of year 37,526,275 61,568,096 99,121,960 228,969,969 93,809,837 17,052,518 ----------- ----------- ----------- ------------ ------------ ----------- Net assets, end of year $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 =========== ========== =========== ============ ============ ===========
15 Vanguard Vanguard Vanguard Participant Index Trust Wellesley International Loan 500 Portfolio Income Fund Value Fund Total Additions to net assets attributable to: Investment income Net appreciation (depreciation) $ 37,725,059 $ 242,309 $ 1,607,424 $38,648,777 Interest & dividends 2,822,467 3,849,330 1,226,704 $2,029,059 46,828,458 Contributions and transfers: Employee contributions 13,598,274 3,228,244 1,772,424 50,750,177 Employer contributions 1,859,070 485,963 285,004 8,219,008 Transfers (Note F and G) 1,288 168 460 95,969 100,188 ------------ ----------- ------------ ------------ ------------ Total additions 56,006,158 7,806,014 4,892,016 2,125,028 144,546,608 Deductions from net assets attributable to: Distributions to participants 35,011,683 7,372,390 2,479,399 2,412,421 145,309,738 Administrative expenses 24,800 6,739 3,471 0 117,034 Transfers (Notes F and G) 175,646,449 41,019,895 16,017,309 21,561,171 744,597,372 ------------ ----------- ------------ ------------ ------------ Total deductions 210,682,932 48,399,024 18,500,179 23,973,592 890,024,144 Interfund Transfers 18,244,209 7,894,993 (1,697,539) (1,144,033) 0 Decrease in net assets (136,432,565) (32,698,017) (15,305,702) (22,992,597) (745,477,536) ------------ ----------- ----------- ------------ ------------ Net assets, beginning of year 136,432,565 32,698,017 15,305,702 22,992,597 745,477,536 ------------ ----------- ----------- ------------ ------------ Net assets, end of year $ 0 $ 0 $ 0 $ 0 $ 0 ============ =========== =========== =========== ============
16 E-SYSTEMS, INC. EMPLOYEE SAVINGS PLAN LINE 27d - SCHEDULE OF REPORTABLE TRANSACTIONS for the year ended December 31, 1998 Cost of Historical Current Value of Assets Historical Description of Asset Purchase Price Selling Price Cost of Asset on Transaction Date Gain (Loss) Category (iii)--Series of securities transactions Vanguard 500 Index Fund $81,138,253 $81,138,253 Vanguard 500 Index Fund $77,516,822 $60,408,602 77,516,822 $17,108,220 Vanguard Morgan Growth Fund 40,366,110 40,366,110 Vanguard Morgan Growth Fund 37,139,375 32,953,957 37,139,375 4,185,418 Vanguard Prime Money Market 77,930,088 77,930,088 Vanguard Prime Money Market 78,428,524 78,428,524 78,428,524 Vanguard Windsor Fund 49,282,450 49,282,450 Vanguard Windsor Fund 80,389,112 77,116,825 80,389,112 3,272,287 Vanguard Retirement Savings Trust 27,412,254 27,412,254 Vanguard Retirement Savings Trust 31,161,006 31,161,006 31,161,006 Raytheon Common Stock Fund 25,752,750 25,752,750 Raytheon Common Stock Fund 33,018,710 30,456,483 33,018,710 2,562,227 There were no category (i), (ii) or (iv) reportable transactions during 1998.
1 EXHIBIT 99.5a CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (File No. 333-56117) of Raytheon Company of our report dated June 4, 1999 relating to the financial statements of the Raytheon E-Systems, Inc. Employee Savings Plan, which appears in this Form 10-K/A. PricewaterhouseCoopers LLP Boston, Massachusetts June 29, 1999
1 EXHIBIT 99.6 RAYTHEON TI SYSTEMS SAVINGS PLAN FINANCIAL STATEMENTS TO ACCOMPANY 1998 FORM 5500 ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN UNDER ERISA OF 1974 FOR THE YEAR ENDED DECEMBER 31, 1998 The supplemental schedules to the Plan's Form 5500 are not required since the Plan's assets are held in a Master Trust. Accordingly, the Plan administrator must file detailed financial information, including the supplemental schedules, separately with the Department of Labor.
2 REPORT OF INDEPENDENT ACCOUNTANTS To the Participants and Administrator of the Raytheon TI Systems Savings Plan: In our opinion, the accompanying statements of net assets available for plan benefits and the related statement of changes in net assets available for plan benefits present fairly, in all material respects, the net assets available for benefits of the Raytheon TI Systems Savings Plan (the "Plan") at December 31, 1998 and 1997, and the changes in net assets available for benefits for the year ended December 31, 1998 in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. As discussed in Notes A and H to the financial statements, the Board of Directors of Raytheon Company voted on December 16, 1998, to merge the Plan into the Raytheon Savings and Investment Plan. PricewaterhouseCoopers LLP Boston, Massachusetts June 4, 1999
3 RAYTHEON TI SYSTEMS SAVINGS PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS as of December 31, 1998 and 1997 1998 1997 Assets: Master trust investments: At contract value (Notes B, E and I) $ 36,008,015 $ 27,129,250 At fair value (Notes B, F and I) 215,389,507 151,647,372 ------------ ------------ 251,397,522 178,776,622 ------------ ------------ Receivables: Accrued investment income and other receivables 422,047 528,072 Cash and cash equivalents 4,278,946 1,673,631 ------------ ------------ Total assets 256,098,515 180,978,325 ------------ ------------ Liabilities: Payable for outstanding purchases 132,047 533,996 Accrued expenses and other payables 179,030 192,678 Transfer payables (Note H) 255,787,438 ------------ ------------ Total liabilities 256,098,515 726,674 ------------ ------------ Net assets available for plan benefits $ - $180,251,651 ============ ============ The accompanying notes are an integral part of the financial statements.
4 RAYTHEON TI SYSTEMS SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS for the year ended December 31, 1998 Additions to net assets attributable to: Investment income (Notes B, E and I): Net appreciation of investments $ 25,229,092 Interest & Dividends 8,294,811 ------------ 33,523,903 Contributions and deferrals: Employee deferrals 43,369,679 Employer contributions 8,443,415 Transfers (Note G) 32,797 ------------ 51,845,891 Total additions 85,369,794 ------------ Deductions from net assets attributable to: Distributions to participants 9,757,925 Administrative expenses 16,103 Transfers (Note G and H) 255,847,417 ------------ Total deductions 265,621,445 ------------ Decrease in net assets (180,251,651) Net assets, beginning of year 180,251,651 ------------ Net assets, end of year $ - ============ The accompanying notes are an integral part of the financial statements.
5 RAYTHEON TI SYSTEMS SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS A. Description of Plan: General As more fully described in Note H, the Raytheon TI Systems Savings Plan (the "Plan") ceased to exist as of December 31, 1998 and effective January 1, 1999, was merged into the Raytheon Savings and Investment Plan (RAYSIP). The following description of the Plan provides only general information that is applicable through December 31, 1998. Participants should refer to the plan document for a complete description of the Plan's provisions. The Plan was established on July 11, 1997 for former employees of Texas Instruments. The Plan is a defined contribution plan covering certain employees of Raytheon Company (the "Company"). An employee becomes eligible to participate in the Plan on the date he or she becomes an employee and may enter the Plan any day thereafter during his or her employment. The purpose of the Plan is to provide participants with a tax-effective means of meeting both short and long-term investment objectives. The Plan is intended to be a "qualified cash or deferred arrangement" under the Internal Revenue Code (the "Code"). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan's investments are combined with the investments of other similar defined contribution plans of the Company into the Raytheon Company Master Trust for Defined Contribution Plans ("Master Trust"). The trustee of the Master Trust maintains a separate account reflecting the equitable share in the Trust of each plan. Investment income and administrative expenses relating to the Master Trust are allocated to the individual plans based upon average monthly balances invested by each plan. Contributions and Deferrals Eligible employees are allowed to defer to the Plan up to 17% of their salaries. The Company contributes amounts equal to 50% of each participant's deferral, up to a maximum of 2% of the participant's salary. For 1998, the annual employee deferral for a participant cannot exceed $10,000. Rollover contributions from other qualified plans are accepted by the Plan. Participants may invest their deferrals in any combination of nine funds: (a) a Fixed Income Fund under which assets are invested primarily in contracts providing for fixed rates of interest for specified periods of time, (b) the Fidelity Equity Income Fund which invests in shares of a mutual fund consisting primarily of income-producing equity securities, (c) a Raytheon Common Stock Fund which invests in shares of Raytheon Company common stock, (d) a Stock Index Fund which invests in a commingled pool consisting primarily of equity securities and is designed to track the S&P 500 Index, (e) the Fidelity Balanced Fund which invests
6 in shares of a mutual fund consisting primarily of equity securities, bonds and money market instruments, (f) the Fidelity Magellan Fund, a growth fund which invests primarily in equities of companies of all types and sizes, (g) the Fidelity Blue Chip Fund, a growth fund which invests primarily in equities of well known and established companies, (h) the Templeton Foreign I Fund, a long-term capital growth fund which invests in stocks and debt obligations of companies and governments of any nation and (i) the Fidelity Investment Grade Bond Fund which invests primarily in U.S. government and corporate bonds including, without limitation, index funds and mutual funds. The Fidelity Investment Grade Bond Fund was eliminated as an option during 1998 and balances were transferred into the Fixed Income Fund. Dividends and distributions from investments of the Fidelity Equity Income Fund, the Raytheon Common Stock Fund, the Stock Index Fund, the Fidelity Balanced Fund, the Fidelity Magellan Fund, the Fidelity Blue Chip Fund, the Templeton Foreign I Fund and the Fidelity Investment Grade Bond Fund are reinvested in their respective funds; stock dividends, stock splits and similar changes are also reflected in the funds. Participant Accounts Each participant's account is credited with the participant's deferral, the Company's contribution and an allocation of plan earnings. Plan earnings are allocated based on account balances by fund. Vesting Participants are fully and immediately vested in their entire account balance including voluntary deferrals, employer contributions and all investment earnings thereon. Distributions to Participants A participant may withdraw all or a portion of deferrals, employer contributions and related earnings upon attainment of age 59 1/2. For reasons of financial hardship, as defined in the plan document, a participant may withdraw all or a portion of deferrals. On termination of employment, a participant will receive a lump-sum distribution unless the vested account is valued in excess of $3,500 and the participant elects to defer distribution. A retiree or a beneficiary of a deceased participant may defer the distribution until January of the year following attainment of age 65. Loans to Participants A participant may borrow against a portion of the balance in the participant's account, subject to certain restrictions. The maximum amount of a loan is the lesser of one-half of the participant's vested account balance or $50,000. The minimum loan which may be granted is $500. The interest rate applied is equal to the prime rate published in the Wall Street Journal on the first business day in June and December of each year. Loans must be repaid over a period of up to five years by means of payroll deductions. In certain cases, the repayment period may be extended up to 15 years. Interest paid to the Plan on loans to participants is credited to the borrower's account in the investment fund to which repayments are made.
7 Administrative Expenses Substantially all expenses of administering the Plan are paid by the plan participants. B. Summary of Significant Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting. The Plan's investment contracts are fully benefit-responsive and are therefore included in the financial statements at their contract value, defined as net contributions and deferrals plus interest earned on the underlying investments at contracted rates. Contract value approximates fair value. Investments in mutual funds and the commingled pool are valued at the closing net asset value reported on the last business day of the year. Investments in securities (common stocks) traded on a national securities exchange are valued at the last reported sales price on the last business day of the year. Cash equivalents are short-term money market instruments and are valued at cost, which approximates fair value. Participant loans are valued at cost, which approximates fair value. Security transactions are recorded on the trade date. Except for its investment contracts (Note E), the Plan's investments are held by bank-administered trust funds. Payables for outstanding security transactions represent trades which have occurred but have not yet settled. The Plan presents in the statement of changes in net assets the net appreciation (depreciation) in the fair value of its investments which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. Dividend income is recorded on the ex-dividend date. Income from other investments is recorded as earned on an accrual basis. Investment income includes both dividends and interest income. Benefits are recorded when paid. The preparation of the financial statements in conformity with generally accepted accounting principles requires the Plan administrator to make significant estimates and assumptions that affect the reported amounts of net assets and liabilities available for benefits at the date of the financial statements and the changes in net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from the estimates included in the financial statements.
8 The Plan provides for various investment options in any combination of stocks, bonds, fixed income securities, mutual funds and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the statement of net assets available for plan benefits and the statement of changes in net assets available for plan benefits. C. Federal Income Tax Status: The Internal Revenue Service has determined and informed the Company by letter dated March 1999 that the Plan, as adopted on July 11, 1997, and related trust are designed in accordance with applicable sections of the Code. The Plan has been amended since applying for the determination letter. However, the Plan administrator and the Plan's legal counsel believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the Code. Therefore, no provision for income taxes has been included in the Plan's financial statements. D. Plan Termination: Although it has not expressed any intention to do so, the Company reserves the right under the Plan at any time or times to discontinue its contributions and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, plan assets shall be distributed among all participants in proportion to their interest and employee contributions shall be distributed in accordance with the provisions contained in the Code. E. Investment Contracts: The Plan invests in collateralized fixed income investment portfolios which are managed by insurance companies and investment management firms. The credited interest rates are adjusted semiannually to reflect the experienced and anticipated yields to be earned on such investments, based on their book value. The annualized average yield and credited interest rates were as follows:
9 Annualized Credited Average Yield Interest Rate For the year ended December 31, 1998: Banker's Trust (WBS 92-485) 6.85% 6.85% Metropolitan Life Insurance Company (GIC GA-12908) 6.58% 6.58% Metropolitan Life Insurance Company (GIC GA-13659) 6.10% 6.10% Prudential Asset Management Company (GIC 917163-001) 6.75% 6.75% Connecticut General (GIC 0025174) 5.58% 5.58% Fidelity IPL (633-GCDC) 5.62% 5.62% Monumental Life Insurance Company (GIC BDA00463FR-00) 7.84% 7.84% For the year ended December 31, 1997: Banker's Trust (WBS 92-485) 6.95% 6.95% Metropolitan Life Insurance Company (GIC GA-12908) 6.86% 6.86% Metropolitan Life Insurance Company (GIC GA-13659) 6.43% 6.43% Prudential Asset Management Company (GIC 917163-001) 6.99% 6.99% The contract values are subject to limitations in certain situations including large workforce reductions and plan termination. In the financial statements the two Metropolitan Life Insurance Company contracts are recorded as one investment option. F. Related Party Transactions: The Plan's trustee is Fidelity Management Trust Company (the "Trustee"). The Trustee holds the funds for the Plan and is responsible for managing the Plan's investment assets, executing all investment transactions, recording approved transactions, and, therefore these transactions qualify as party-in-interest. In accordance with the provisions of the Plan, the Trustee acts as the Plan's agent for purchases and sales of shares of Raytheon Company common stock. These transactions are performed on a Master Trust level. For the Master Trust, purchases amounted to $288,116,995 and sales amounted to $257,878,566 for the year ended December 31, 1998. G. Transfers: Transfers include transfers of participant accounts, individually and/or in-groups, between the Plan and other plans included in the Raytheon Company Master Trust for those participants, and/or groups of participants, who changed plans during the year. Transfers also include transfers of participant accounts, individually and/or in-groups, between the Plan and similar savings plans of other companies for those participants who changed companies during the year. H. Transfer Payables: As part of an overall effort to minimize plan design differences and increase administrative efficiencies, the Board of Directors of Raytheon Company voted on December 16, 1998 to merge the participants and their account balances into the RAYSIP. The Plan ceased to exist on December 31, 1998 and effective January 1, 1999, the plan provisions of the RAYSIP govern. The transfer payable amount represents a complete transfer of assets to the RAYSIP.
10 I. Fund Data: The following is a summary of net assets available for plan benefits by fund as of December 31, 1998: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Blue Chip Fund Fund Stock Fund Fund Fund Fund Fund Assets: Master trust investments: At contract value: Bankers Trust $ 12,676,508 Prudential Life Insurance Company of America 6,347,889 Metropolitan Life Insurance Company 15,933,322 Fidelity 691,160 Connecticut General 175,137 Monumental Life Insurance Company 183,999 At fair value: Fidelity Equity Income Fund $ 17,276,885 Raytheon Company Common Stock Fund $54,644,741 BT Pyramid Equity Index Fund $46,192,796 Fidelity Balanced Fund $13,627,478 Fidelity Magellan Fund $19,552,160 Fidelity Blue Chip Fund $41,109,867 Templeton Foreign I Fund Loans receivable from participants ------------ ----------- ----------- ----------- ----------- ----------- ----------- Total investments 36,008,015 17,276,885 54,644,741 46,192,796 13,627,478 19,552,160 41,109,867 ------------ ----------- ----------- ----------- ----------- ----------- ----------- Receivables: Accrued investment income and other receivables 324,556 97,491 Cash and cash equivalents 3,320,586 752,045 206,315 ------------ ----------- ----------- ----------- ----------- ----------- ----------- Total assets 39,328,601 17,276,885 55,721,342 46,496,602 13,627,478 19,552,160 41,109,867 ------------ ----------- ----------- ----------- ----------- ----------- ----------- Liabilities: Payable for outstanding purchases 132,047 Accrued expenses and other payables 126,681 52,349 Transfer payables 39,328,601 17,276,885 55,462,614 46,444,253 13,627,478 19,552,160 41,109,867 ------------ ----------- ----------- ----------- ----------- ----------- ----------- Total liabilities 39,328,601 17,276,885 55,721,342 46,496,602 13,627,478 19,552,160 41,109,867 ------------ ----------- ----------- ----------- ----------- ----------- ----------- Net assets available for plan benefits $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 ============ =========== =========== ========== =========== =========== ===========
11 Templeton Foreign I Loan Account Fund Total Assets: Master trust investments: At contract value: Bankers Trust $ 12,676,508 Prudential Insurance Company of America 6,347,889 Metropolitan Life Insurance Company 15,933,322 Fidelity 691,160 Connecticut General 175,137 Monumental Life Insurance Company 183,999 At fair value: Fidelity Equity Income Fund 17,276,885 Raytheon Company Common Stock Fund 54,644,741 BT Pyramid Equity Index Fund 46,192,796 Fidelity Balanced Fund 13,627,478 Fidelity Magellan Fund 19,552,160 Fidelity Blue Chip Fund 41,109,867 Templeton Foreign I Fund $ 6,966,650 6,966,650 Loans receivable from participants $16,018,930 16,018,930 ----------- ----------- ------------ Total investments 6,966,650 16,018,930 251,397,522 ----------- ----------- ------------ Receivables: Accrued investment income and other receivables 422,047 Cash and cash equivalents 4,278,946 ----------- ----------- ------------ Total assets 6,966,650 16,018,930 256,098,515 ----------- ----------- ------------ Liabilities: Payable for outstanding purchases 132,047 Accrued expenses and other payables 179,030 Transfer payables 6,966,650 16,018,930 255,787,438 ----------- ----------- ------------ Total liabilities 6,966,650 16,018,930 256,098,515 ----------- ----------- ------------ Net assets available for plan benefits $ 0 $ 0 $ 0 =========== =========== ============
12 I. Fund Data, Continued: The following is a summary of net assets available for plan benefits by fund as of December 31, 1997: Raytheon Fixed Equity Common Stock Balanced Magellan Income Fund Fund Stock Fund Index Fund Fund Fund 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
13 Templeton Investment Blue Chip Foreign I Grade Loan Fund Fund Bond Fund Fund Total Assets: Investments: At contract value: Bankers Trust* $ 10,132,377 Prudential Life Insurance Company of America 6,284,670 Metropolitan Life Insurance Company* 10,712,203 At fair value: Fidelity Equity Income Fund 8,254,100 Raytheon Company Common Stock Fund* 62,818,459 BT Pyramid Equity Index Fund* 27,442,258 Fidelity Balanced Fund 7,638,642 Fidelity Magellan Fund 6,635,153 Fidelity Blue Chip Fund* $ 18,760,639 18,760,639 Templeton Foreign I Fund $5,471,176 5,471,176 Fidelity Investment Grade Bond Fund $1,548,125 1,548,125 Loans receivable from participants* $ 13,078,820 13,078,820 ------------ ---------- ---------- ------------ ------------ Total investments 18,760,639 5,471,176 1,548,125 13,078,820 178,776,622 ------------ ---------- ---------- ------------ ------------ Receivables: Accrued investment income and other receivables 528,072 Cash and cash equivalents 1,673,631 ------------ ---------- ---------- ------------ ------------ Total assets 18,760,639 5,471,176 1,548,125 13,078,820 180,978,325 ------------ ---------- ---------- ------------ ------------ Liabilities: Payable for outstanding purchases 533,996 Accrued expenses and other payables 192,678 ------------ ---------- ---------- ------------ ------------ Total liabilities - - - - 726,674 ------------ ---------- ---------- ------------ ------------ Net assets available for plan benefits $ 18,760,639 $5,471,176 $1,548,125 $ 13,078,820 $180,251,651 ============ ========== ========== ============ ============ *Represent more than 5% of net assets available for plan benefits
14 I. Fund Data, Continued: The following is a summary of changes in net assets available for plan benefits by fund for the year ended December 31, 1998: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Blue Chip Fund Fund Stock Fund Fund Fund Fund Fund Additions to net assets attributable to: Investment income: Net appreciation (depreciation) of investments $ 3,295 $ 584,690 $ 5,158,554 $ 9,280,287 $ 829,007 $ 3,117,037 $ 7,334,555 Interest & Dividends 1,993,246 874,982 1,116,139 717,602 1,421,709 ----------- ------------ ----------- ----------- ----------- ------------ ------------ 1,996,541 1,459,672 5,158,554 9,280,287 1,945,146 3,834,639 8,756,264 ----------- ------------ ----------- ----------- ----------- ------------ ------------ Contributions and deferrals: Employee deferrals 6,104,144 5,975,544 3,061,022 7,954,043 2,632,497 5,181,263 8,707,144 Employer contributions 1,130,391 1,217,093 659,688 1,608,662 479,166 944,884 1,701,689 Transfers 14,206 42,771 3,898 (12,411) (1,814) (1,765) ------------ ------------ ----------- ----------- ----------- ------------ ------------ 7,248,741 7,235,408 3,724,608 9,550,294 3,111,663 6,124,333 10,407,068 ------------ ------------ ----------- ----------- ----------- ------------ ------------ Total additions 9,245,282 8,695,080 8,883,162 18,830,581 5,056,809 9,958,972 19,163,332 ------------ ------------ ----------- ----------- ----------- ------------ ------------ Deductions from net assets attributable to: Distributions to participants 1,860,825 745,470 1,703,163 1,536,525 675,276 535,393 1,528,144 Administrative expenses 2,492 940 5,698 2,756 767 764 1,998 Transfers (13,295) 27,074 62,761 Transfers plan mergers 39,328,602 17,276,885 55,462,614 46,444,253 13,627,478 19,552,160 41,109,867 ------------ ------------ ----------- ------------ ----------- ------------ ------------ Total deductions 41,191,919 18,010,000 57,198,549 48,046,295 14,303,521 20,088,317 42,640,009 ------------ ------------ ----------- ------------ ----------- ------------ ------------ Interfund transfers 4,550,112 1,060,820 (15,443,534) 1,506,164 1,608,070 3,494,192 4,716,038 ------------ ------------ ----------- ------------ ----------- ------------ ------------ Decrease in net assets (27,396,525) (8,254,100) (63,758,921) (27,709,550) (7,638,642) (6,635,153) (18,760,639) Net assets, beginning of year 27,396,525 8,254,100 63,758,921 27,709,550 7,638,642 6,635,153 18,760,639 ------------ ------------ ----------- ----------- ------------ ------------ ------------ Net assets, end of year $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 ============ ============ =========== =========== ============ ============ ============
15 Templeton Investment Foreign I Grade Bond Loan Fund Fund Fund Total Additions to net assets attributable to: Investment income: Net appreciation (depreciation) of investments $(1,095,967) $ 17,634 $ 25,229,092 Interest & Dividends 752,610 162,858 $ 1,255,665 8,294,811 ----------- ------------ ------------ ------------- (343,357) 180,492 1,255,665 33,523,903 ----------- ------------ ------------- ------------- Contributions and deferrals: Employee deferrals 2,897,062 856,960 43,369,679 Employer contributions 598,350 103,492 8,443,415 Transfers (12,088) 32,797 ---------- ------------ ------------- ------------- 3,495,412 960,452 (12,088) 51,845,891 ----------- ------------ ------------- ------------- Total additions 3,152,055 1,140,944 1,243,577 85,369,794 ----------- ------------ ------------- ------------- Deductions from net assets attributable to: Distributions to participants 274,069 123,832 775,228 9,757,925 Administrative expenses 514 174 16,103 Transfers (16,562) 59,978 Transfers plan mergers 6,966,650 16,018,930 255,787,439 ----------- ------------ -------------- ------------- Total deductions 7,241,233 124,006 16,777,596 265,621,445 ----------- ------------ -------------- ------------- Interfund transfers (1,381,998) (2,565,063) 2,455,199 ----------- ----------- -------------- ------------- Decrease in net assets (5,471,176) (1,548,125) (13,078,820) (180,251,651) ----------- ----------- -------------- ------------- Net assets, beginning of year 5,471,176 1,548,125 13,078,820 180,251,651 ------------ ----------- -------------- ------------- Net assets, end of year $ 0 $ 0 $ 0 $ 0 ============ =========== ============= =============
16 J. Master Trust: All plan investments are included under the Master Trust. At December 31, 1998, assets of the Plan represented 0% of the total assets under the Master Trust. This has decreased from 5.1% at December 31, 1997. The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1998: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $ 473,258,791 Prudential Life Insurance Company of America 236,989,116 Metropolitan Life Insurance Company* 594,847,154 Fidelity 25,803,449 Connecticut General 6,538,482 Monumental Life Insurance Company 6,869,338 At fair value: Fidelity Equity Income Fund* $1,464,615,296 Raytheon Company Common Stock Fund* $ 799,542,751 BT Pyramid Equity Index Fund* $ 745,602,791 Fidelity Balanced Fund* $ 442,796,289 Fidelity Magellan Fund* $ 379,680,454 Fidelity Blue Chip Fund* Templeton Foreign I Fund Fidelity Investment Grade Bond Fund Fidelity Retirement Money Market Vanguard Winsor Vanguard Wellesley TRP Small Cap Stock Raytheon Class A Wasting Stock Fund Raytheon GMH Wasting Stock Fund Loans receivable from participants -------------- -------------- -------------- -------------- -------------- -------------- Total investments 1,344,306,330 1,464,615,296 799,542,751 745,602,791 442,796,289 379,680,454 -------------- -------------- -------------- -------------- -------------- -------------- Receivables: Employer contribution Accrued investment income and other receivables 4,748,948 1,573,604 Transfer receivables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803 Cash and cash equivalents 123,969,201 11,004,025 3,330,147 -------------- -------------- -------------- -------------- -------------- -------------- Total assets 2,048,537,201 2,226,757,712 1,255,380,751 967,248,229 755,173,618 616,369,257 -------------- -------------- -------------- -------------- -------------- -------------- Liabilities: Payable for outstanding purchases 1,932,125 Accrued expenses and other payables 1,853,618 844,977 Transfer payables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803 -------------- -------------- -------------- -------------- -------------- -------------- Total liabilities 580,261,670 762,142,416 443,870,770 217,586,664 312,377,329 236,688,803 -------------- -------------- -------------- -------------- -------------- -------------- Net assets available for plan benefits $1,468,275,531 $1,464,615,296 $ 811,509,981 $ 749,661,565 $ 442,796,289 $ 379,680,454 ============== ============== ============== ============== ============== ==============
17 Templeton Investment Retirement Vanguard Vanguard Blue Chip Foreign I Grade Money Winsor Wellesley Fund Fund Bond Fund Market Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* Prudential Life Insurance Company of America Metropolitan Life Insurance Company* Fidelity Connecticut General Monumental Life Insurance Company At fair value: Fidelity Equity Income Fund* Raytheon Company Common Stock Fund* BT Pyramid Equity Index Fund* Fidelity Balanced Fund* Fidelity Magellan Fund* Fidelity Blue Chip Fund* $ 391,787,509 Templeton Foreign I Fund $ 6,966,704 Fidelity Investment Grade Bond Fund $ - Fidelity Retirement Money Market $ 13,202,524 Vanguard Winsor $ 41 Vanguard Wellesley $ 18 TRP Small Cap Stock Raytheon Class A Wasting Stock Fund Raytheon GMH Wasting Stock Fund Loans receivable from participants -------------- -------------- -------------- ------------- ------------- -------------- Total investments 391,787,509 6,966,704 - 13,202,524 41 18 -------------- -------------- -------------- ------------- ------------- -------------- Receivables: Employer contribution 3,595,261 Accrued investment income and other receivables Transfer receivables 191,269,141 6,966,652 16,715,590 Cash and cash equivalents -------------- -------------- -------------- ------------- ------------- -------------- Total assets 583,056,650 13,933,356 - 33,513,375 41 18 -------------- -------------- -------------- ------------- ------------- -------------- Liabilities: Payable for outstanding purchases Accrued expenses and other payables Transfer payables 191,269,141 6,966,652 16,715,590 -------------- -------------- -------------- ------------- ------------- -------------- Total liabilities 191,269,141 6,966,652 - 16,715,590 - - -------------- -------------- -------------- ------------- ------------- -------------- Net assets available for plan benefits $ 391,787,509 $ 6,966,704 $ - $ 16,797,785 $ 41 $ 18 ============== ============== ============== ============== ============== ==============
18 TRP Small RTN.A GMH Cap Stock Wasting Wasting Loan Fund Fund Fund Fund Other(1) Total Assets: Investments: At contract value: Bankers Trust* $ 473,258,791 Prudential Life Insurance Company of America 236,989,116 Metropolitan Life Insurance Company* 594,847,154 Fidelity 25,803,449 Connecticut General 6,538,482 Monumental Life Insurance Company 6,869,338 At fair value: Fidelity Equity Income Fund* 1,464,615,296 Raytheon Company Common Stock Fund* 799,542,751 BT Pyramid Equity Index Fund* 745,602,791 Fidelity Balanced Fund* 442,796,289 Fidelity Magellan Fund* 379,680,454 Fidelity Blue Chip Fund* 391,787,509 Templeton Foreign I Fund 6,966,704 Fidelity Investment Grade Bond Fund - Fidelity Retirement Money Market 13,202,524 Vanguard Winsor 41 Vanguard Wellesley 18 TRP Small Cap Stock $ 348 348 Raytheon Class A Wasting Stock Fund $ 116,129,149 116,129,149 Raytheon GMH Wasting Stock Fund $ 172,859,819 172,859,819 Loans receivable from participants $ 250,687,865 250,687,865 -------------- -------------- -------------- -------------- ------------- -------------- Total investments 348 116,129,149 172,859,819 250,687,865 - 6,128,177,888 -------------- -------------- -------------- -------------- ------------- -------------- Receivables: Employer contribution 3,595,261 Accrued investment income and other receivables 1,193,397 23,640 7,539,589 Transfer receivables 120,761,325 178,295,618 117,046,618 $ 855,826,675 4,035,178,551 Cash and cash equivalents 3,480,490 5,474,220 147,258,083 -------------- -------------- -------------- ------------- -------------- -------------- Total assets 348 241,564,361 356,653,297 367,734,483 855,826,675 10,321,749,372 -------------- -------------- -------------- ------------- -------------- -------------- Liabilities: Payable for outstanding purchases 1,932,125 Accrued expenses and other payables 41,711 62,061 2,802,367 Transfer payables 120,761,325 178,295,618 117,046,618 3,179,351,876 -------------- -------------- -------------- ------------- -------------- -------------- Total liabilities - 120,803,036 178,357,679 117,046,618 - 3,184,086,368 -------------- -------------- -------------- ------------- -------------- -------------- Net assets available for plan benefits $ 348 $120,761,325 $ 178,295,618 $ 250,687,865 $ 855,826,675 $7,137,663,004 ============== ============== ============== ============== ============== ============== Percentage of Master Trust that are Plan assets - 0.00% *Represent more than 5% of net assets available for plan benefits (1) Other represents Raytheon plans merging in from outside the Master Trust. Note: Not all funds within the Master Trust are available options to participants in the Plan.
19 J. Master Trust, Continued: The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1997: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $351,035,073 Prudential Life Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* $782,799,011 Raytheon Company Common Stock Fund* $745,980,294 BT Pyramid Equity Index Fund* $484,781,406 Fidelity Balanced Fund $117,556,481 Fidelity Magellan Fund $91,863,155 Fidelity Blue Chip Fund Templeton Foreign I Fund Fidelity Investment Grade Bond Fund Fidelity Retirement Money Market Fund Loans receivable from participants ------------ ------------ ------------ ------------ ------------ ----------- Total investments 939,889,852 782,799,011 745,980,294 484,781,406 117,556,481 91,863,155 ------------ ------------ ------------ ------------ ------------ ----------- Receivables: Employer contribution Accrued investment income and other receivables 5,489,592 1,161,112 Cash and cash equivalents 9,232,100 13,498,051 4,761,268 ------------ ------------ ------------ ------------ ------------ ----------- Total assets 949,121,952 782,799,011 764,967,937 490,703,786 117,556,481 91,863,155 ------------ ------------ ------------ ------------ ------------ ----------- Liabilities: Payable for outstanding purchases 6,340,318 Accrued expenses and other payables 1,480,875 1,200,471 ------------- ------------ ------------ ------------ ------------ ----------- Total liabilities - - 7,821,193 1,200,471 - - ------------- ------------ ------------ ------------ ------------ ----------- Net assets available for plan benefits $949,121,952 $782,799,011 $757,146,744 $489,503,315 $117,556,481 $91,863,155 ============ ============ ============ ============ ============ ===========
20 Templeton Investment Retirement Blue Chip Foreign I Grade Money Loan Fund Fund Bond Fund Market Fund Fund Total Assets: Investments: At contract value: Bankers Trust* $351,035,073 Prudential Life Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* 782,799,011 Raytheon Company Common Stock Fund* 745,980,294 BT Pyramid Equity Index Fund* 484,781,406 Fidelity Balanced Fund 117,556,481 Fidelity Magellan Fund 91,863,155 Fidelity Blue Chip Fund $136,586,123 136,586,123 Templeton Foreign I Fund $5,471,176 5,471,176 Fidelity Investment Grade Bond Fund $1,548,125 1,548,125 Fidelity Retirement Money Market Fund $12,186,085 12,186,085 Loans receivable from participants $166,395,767 166,395,767 ------------ ---------- ---------- ----------- ------------ ------------- Total investments 136,586,123 5,471,176 1,548,125 12,186,085 166,395,767 3,485,057,475 ------------ ---------- ---------- ----------- ------------ -------------- Receivables: Employer contribution 4,015,100 4,015,100 Accrued investment income and other receivables 6,650,704 Cash and cash equivalents 27,491,419 ------------ ---------- ---------- ----------- ------------ -------------- Total assets 136,586,123 5,471,176 1,548,125 16,201,185 166,395,767 3,523,214,698 Liabilities: Payable for outstanding purchases 6,340,318 Accrued expenses and other payables 2,681,346 ------------ ---------- ---------- ----------- ------------ -------------- Total liabilities - - - - - 9,021,664 ------------ ---------- ---------- ----------- ------------ -------------- Net assets available for plan benefits $136,586,123 $5,471,176 $1,548,125 $16,201,185 $166,395,767 $3,514,193,034 ============ ========== ========== =========== ============ ============== Percentage of Master Trust that are Plan assets - 5.1% *Represent more than 5% of net assets available for plan benefits Note: Not all funds within the Master Trust are available options to participants in the Plan.
21 J. Master Trust, Continued: The following is a summary of investment income by fund under the Master Trust for the year ended December 31, 1998: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Investment income: Net appreciation (depreciation) of assets $ 30,695 $ 49,019,748 $74,202,083 $149,571,006 $16,091,158 $62,195,801 Interest & Dividends 81,886,632 86,279,682 1,792 42,537,357 13,255,763 ----------- ------------ ----------- ------------ ----------- ----------- Total investment income/(loss) $81,917,327 $135,299,430 $74,203,875 $149,571,006 $58,628,515 $75,451,564 =========== ============ =========== ============ =========== ===========
22 Templeton Investment Retirement Vanguard Vanguard Blue Chip Foreign I Grade Money Winsor Wellesley Fund Fund Bond Fund Market Fund Fund Fund Investment income: Net appreciation (depreciation) of assets $60,264,181 $(1,095,980) $ 17,635 $2,864,378 $1,379,950 Interest & Dividends 13,550,491 752,610 162,858 $ 349,740 ----------- ----------- -------- ---------- ---------- ---------- Total investment income/(loss) $73,814,672 $ (343,370) $180,493 $ 349,740 $2,864,378 $1,379,950 =========== =========== ======== ========== ========== ==========
23 TRP Small RTN.A GMH Cap Stock Wasting Wasting Loan Fund Fund Fund Fund Total Investment income: Net appreciation (depreciation) of assets $ 15 $ (35,268) $44,604,025 $459,109,427 Interest & Dividends $15,334,403 254,111,328 ----------- ---------- ----------- ----------- ------------ Total investment income/(loss) $ 15 $ (35,268) $44,604,025 $15,334,403 $713,220,755 =========== ========== =========== =========== ============
1 EXHIBIT 99.6a CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (File No. 333-56117) of Raytheon Company of our report dated June 4, 1999 relating to the financial statements of the Raytheon TI Systems Savings Plan, which appears in this Form 10-K/A. PricewaterhouseCoopers LLP Boston, Massachusetts June 29, 1999
1 EXHIBIT 99.7 RAYTHEON SALARIED SAVINGS AND INVESTMENT PLAN FINANCIAL STATEMENTS TO ACCOMPANY 1998 FORM 5500 ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN UNDER ERISA OF 1974 FOR THE YEAR ENDED DECEMBER 31, 1998 The supplemental schedules required to accompany the Plan's Form 5500 are not required since the Plan's assets are held in a Master Trust. Accordingly, the Plan administrator must file detailed financial information, including the supplemental schedules, separately with the Department of Labor.
2 Report of Independent Accountants To the Participants and Administrator of the Raytheon Salaried Savings and Investment Plan: In our opinion, the accompanying statements of net assets available for plan benefits and the related statement of changes in net assets available for plan benefits present fairly, in all material respects, the net assets available for benefits of the Raytheon Salaried Savings and Investment Plan (the "Plan") at December 31, 1998 and 1997, and the changes in net assets available for benefits for the year ended December 31, 1998 in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. As discussed in Notes A and H to the financial statements, the Board of Directors of Raytheon Company voted on December 16, 1998, to merge the Plan into the Raytheon Savings and Investment Plan. PricewaterhouseCoopers LLP Boston, Massachusetts June 4, 1999
3 RAYTHEON SALARIED SAVINGS AND INVESTMENT PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS as of December 31, 1998 and 1997 1998 1997 Assets: Master trust investments: At contract value (Notes B, E and I) $ 361,616,720 $ 126,113 At fair value (Notes B, F and I) 1,782,619,180 3,228,259 -------------- ---------- 2,144,235,900 3,354,372 -------------- ---------- Receivables: Accrued investment income and other receivables 1,831,253 8,765 Cash and cash equivalents 43,313,582 24,181 -------------- ---------- Total assets 2,189,380,735 3,387,318 -------------- ---------- Liabilities: Payable for outstanding purchases 176,984 9,147 Accrued expenses and other payables 407,056 3,010 Transfer payables (Note H) 2,188,796,695 -------------- ---------- Total liabilities 2,189,380,735 12,157 -------------- ---------- Net assets available for plan benefits $ - $3,375,161 ============== ========== The accompanying notes are an integral part of the financial statements.
4 RAYTHEON SALARIED SAVINGS AND INVESTMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS for the year ended December 31, 1998 Additions to net assets attributable to: Investment income (Notes B, E and I): Net appreciation of investments $ 105,095,438 Interest & Dividends 96,090,429 -------------- 201,185,867 Contributions and deferrals: Employee deferrals 145,632,603 Employer contributions 62,277,760 Transfers (Note G) 1,889,867,093 -------------- 2,097,777,456 Total additions 2,298,963,323 -------------- Deductions from net assets attributable to: Distributions to participants 113,424,315 Administrative expenses 117,473 Transfers (Note G and H) 2,188,796,696 -------------- Total deductions 2,302,338,484 -------------- Decrease in net assets (3,375,161) Net assets, beginning of year 3,375,161 -------------- Net assets, end of year $ - ============== The accompanying notes are an integral part of the financial statements.
5 RAYTHEON SALARIED SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS A. Description of Plan: General As more fully described in Note H, the Raytheon Salaried Savings and Investment Plan (the "Plan") ceased to exist as of December 31, 1998 and effective January 1, 1999 the Plan was merged into the Raytheon Savings and Investment Plan (RAYSIP). The following description of the Plan provides only general information that is applicable through December 31, 1998. The Plan, which was established on December 18, 1997, is a defined contribution plan covering certain employees of Raytheon Company (the "Company"). Participants should refer to the plan document for a complete description of the Plan's provisions. Effective December 18, 1997, General Motors Corporation employees assumed in connection with the merger of the defense business of Hughes Electronics Corporation with the Company (hereafter referred to as the "Hughes transaction"), that participated in the Hughes Salaried Employees' Thrift and Savings Plan, became eligible to participate in the Plan. Participants had the option to rollover amounts accumulated in plans sponsored by General Motors Corporation to the Plan. The option to make a rollover election extended until December 1, 1998. To participate in the Plan, eligible employees must have three months of service and may enter the Plan only on the first day of each month. The purpose of the Plan is to provide participants with a tax-effective means of meeting both short and long-term investment objectives. The Plan is intended to be a "qualified cash or deferred arrangement" under the Internal Revenue Code (the "Code"). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan's investments are combined with the investments of other similar defined contribution plans of the Company into the Raytheon Company Master Trust for Defined Contribution Plans ("Master Trust"). The truste of the Master Trust maintains a separate account reflecting the equitabl share in the Trust of each plan. Investment income and administrative expenses relating to the Master Trust are allocated to the individual plan based upon average monthly balances invested by each plan.
6 Contributions and Deferrals Eligible employees are allowed to defer to the Plan up to 12% of their salaries. The Company contributes amounts equal to 100% of each participant's deferral, up to a maximum of 4% of the participant's salary. The contributions are invested in Raytheon Company common stock for two full plan years following the plan year for which the contributions are made, and are then allocated to participants' accounts. For 1998, the annual employee deferral for a participant cannot exceed $10,000. Rollover contributions from other qualified plans are accepted by the Plan. Participants may invest their deferrals in increments of 1% in any combination of seven funds: (a) a Fixed Income Fund under which assets are invested primarily in contracts providing for fixed rates of interest for specified periods of time, (b) the Fidelity Equity Income Fund which invests in shares of a mutual fund consisting primarily of income-producing equity securities, (c) a Raytheon Common Stock Fund which invests in shares of Raytheon Company common stock, (d) a Stock Index Fund which invests in a commingled pool consisting primarily of equity securities and is designed to track the S&P 500 Index, (e) the Fidelity Balanced Fund which invests in shares of a mutual fund consisting primarily of equity securities, bonds and money market instruments, (f) the Fidelity Magellan Fund, a growth fund which invests primarily in equities of companies of all types and sizes, and (g) the Fidelity Blue Chip Fund, a growth fund which invests primarily in equities of well known and established companies. Amounts held in the RTN-A Wasting Fund and GMH Wasting Fund are shares of Raytheon Company Class A common stock or General Motors Class H common stock, respectively, that were transferred into the Plan as a result of the Hughes transaction. These options are not open for additional contributions and will only be available through December 31, 2002. Dividends and distributions from investments of the Fidelity Equity Income Fund, the Raytheon Common Stock Fund, the Stock Index Fund, the Fidelity Balanced Fund, the Fidelity Magellan Fund, the Fidelity Blue Chip Fund, the RTN-A Wasting Fund and the GHM Wasting Fund are reinvested in their respective funds; stock dividends, stock splits and similar changes are also reflected in the funds. Participant Accounts Each participant's account is credited with the participant's deferral, the Company's contribution and an allocation of plan earnings. Plan earnings are allocated based on account balances by fund. Vesting Participants are immediately vested in their voluntary deferrals plus actual earnings thereon. Vesting occurs upon the earliest of the completion of five years of service, three years of participation, retirement, death, disability, or attainment of normal retirement age. Forfeitures of the non-vested portions of terminated participants' accounts are used to reduce required contributions of the Company.
7 Distributions to Participants A participant may withdraw all or a portion of deferrals, employer contributions and related earnings upon attainment of age 59 1/2. For reasons of financial hardship, as defined in the Plan document, a participant may withdraw all or a portion of deferrals. On termination of employment, a participant will receive a lump-sum distribution unless the vested account is valued in excess of $3,500 and the participant elects to defer distribution. A retiree or a beneficiary of a deceased participant may defer the distribution until January of the year following attainment of age 65. Loans to Participants A participant may borrow against a portion of the balance in the participant's account, subject to certain restrictions. The maximum amount of a loan is the lesser of one-half of the participant's vested account balance or $50,000. The minimum loan which may be granted is $500. The interest rate applied is equal to the prime rate published in the Wall Street Journal on the first business day in June and December of each year. Loans must be repaid over a period of up to 5 years by means of payroll deductions. In certain cases, the repayment period may be extended up to 15 years. Interest paid to the Plan on loans to participants is credited to the borrower's account in the investment fund to which repayments are made. Administrative Expenses Substantially all expenses of administering the Plan are paid by the plan participants. B. Summary of Significant Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting. The Plan's investment contracts are fully benefit-responsive and are therefore included in the financial statements at their contract value, defined as net contributions and deferrals plus interest earned on the underlying investments at contracted rates. Contract value approximates fair value. Investments in mutual funds and the commingled pool are valued at the closing net asset value reported on the last business day of the year. Investments in securities (common stocks) traded on a national securities exchange are valued at the last reported sales price on the last business day of the year. Cash equivalents are short-term money market instruments and are valued at cost, which approximates fair value. Participant loans are valued at cost, which approximates fair value. Security transactions are recorded on the trade date. Except for its investment contracts (Note E), the Plan's investments are held by bank-administered trust funds. Payables for outstanding security transactions represent trades which have occurred but have not yet settled.
8 The Plan presents in the statement of changes in net assets the net appreciation (depreciation) in the fair value of its investments which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. Dividend income is recorded on the ex-dividend date. Income from other investments is recorded as earned on an accrual basis. Investment income includes both dividend and interest income. Benefits are recorded when paid. The preparation of the financial statements in conformity with generally accepted accounting principles requires the Plan administrator to make significant estimates and assumptions that affect the reported amounts of net assets and liabilities available for benefits at the date of the financial statements and the change in net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from the estimates included in the financial statements. The Plan provides for various investment options in any combination of stocks, bonds, fixed income securities, mutual funds and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the statement of net assets available for plan benefits and the statement of changes in net assets available for plan benefits. C. Federal Income Tax Status: The Internal Revenue Service has determined and informed the Company by letter dated February 1999 that the Plan, as adopted on December 18, 1997, and related Trust are designed in accordance with applicable sections of the Code. The Plan has been amended since applying for the letter. However, the Plan administrator and the Plan's legal counsel believe that the Plan is currently designed and being operated in compliance with applicable requirements of the Code. Therefore, no provision for income taxes has been included in the Plan's financial statements. D. Plan Termination: Although it has not expressed any intention to do so, the Company reserves the right under the Plan at any time or times to discontinue its contributions and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, amounts in participants' accounts will be distributed in a single lump sum; if the participant does not consent to an immediate distribution, the amount can be transferred to another defined contribution plan sponsored by the Company.
9 E. Investment Contracts: The Plan invests in collateralized fixed income investment portfolios which are managed by insurance companies or investment management firms. The credited interest rates are adjusted semiannually to reflect the experienced and anticipated yields to be earned on such investments, based on their book value. The annualized average yield and credited interest rates were as follows: Annualized Credited Average Yield Interest Rate For the year ended December 31, 1998: Banker's Trust (WBS 92-485) 6.85% 6.85% Metropolitan Life Insurance Company (GIC GA-12908) 6.58% 6.58% Metropolitan Life Insurance Company (GIC GA-13659) 6.10% 6.10% Prudential Asset Management Company (GIC 917163-001) 6.75% 6.75% Connecticut General (GIC 0025174) 5.58% 5.58% Fidelity IPL (633-GCDC) 5.62% 5.62% Monumental Life Insurance Company (GIC BDA00463FR-00) 7.84% 7.84% For the year ended December 31, 1997: Banker's Trust (WBS 92-485) 6.95% 6.95% Metropolitan Life Insurance Company (GIC GA-12908) 6.86% 6.86% Metropolitan Life Insurance Company (GIC GA-13659) 6.43% 6.43% Prudential Asset Management Company (GIC 917163-001) 6.99% 6.99% The contract values are subject to limitations in certain situations including large workforce reductions and plan termination. In the financial statements the two Metropolitan Life Insurance Company contracts are recorded as one investment option. F. Related Party Transactions: The Plan's trustee is Fidelity Management Trust Company (the "Trustee"). The Trustee holds the funds for the Plan and is responsible for managing the Plan's investment assets, executing all investment transactions, recording approved transactions, and, therefore these transactions qualify as party-in-interest. In accordance with the provisions of the Plan, the Trustee acts as the Plan's agent for purchases and sales of shares of Raytheon Company common stock. These transactions are performed on a Master Trust level. For the Master Trust, purchases amounted to $288,116,995 and sales amounted to $257,878,566 for the year ended December 31, 1998.
10 G. Transfers: Transfers include transfers of participant accounts, individually and/or in groups, between the Plan and other plans included in the Raytheon Company Master Trust for those participants, and/or groups of participants, who changed plans during the year. Transfers also include transfers of participant accounts, individually and/or in groups, between the Plan and similar savings plans of other companies for those participants who changed companies during the year. During the year, amounts rolled over by former employees of General Motors Corporation who participated in the Hughes Salaried Employees' Thrift and Savings Plan and who became eligible to participate in the Plan totaled $1,600,650,947. H. Transfer Payables: As part of an overall effort to minimize plan design differences and increase administrative efficiencies, the Board of Directors of Raytheon Company voted on December 16, 1998 to merge the participants and their account balances into the RAYSIP. The Plan ceased to exist on December 31, 1998 and effective January 1, 1999, the plan provisions of the RAYSIP govern. The transfer payable amount represents a complete transfer of assets to the RAYSIP.
11 I. Fund Data: The following is a summary of net assets available for plan benefits by fund as of December 31, 1998: Participant Directed Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Blue Chip Fund Fund Stock Fund Fund Fund Fund Fund Assets: Master trust investments: At contract value: Bankers Trust $127,306,023 Prudential Insurance Company of America 63,749,776 Metropolitan Life Insurance Company 160,013,140 Fidelity 6,941,095 Connecticut General 1,758,843 Monumental Life Insurance Company 1,847,843 At fair value: Fidelity Equity Income Fund $651,737,328 Raytheon Company Common Stock Fund $14,557,666 BT Pyramid Equity Index Fund $120,795,352 Fidelity Balanced Fund $278,257,042 Fidelity Magellan Fund $197,090,660 Fidelity Blue Chip Fund $127,849,061 Raytheon Class A Wasting Stock Fund Raytheon GMH Wasting Stock Fund Loans receivable from participants ------------ ------------ ----------- ------------ ------------ ------------ ------------ Total investments 361,616,720 651,737,328 14,557,666 120,795,352 278,257,042 197,090,660 127,849,061 ------------ ------------ ----------- ------------ ------------ ------------ ------------ Receivables: Accrued investment income and other receivables 86,463 254,939 Cash and cash equivalents 33,347,560 200,349 539,518 ------------ ------------ ----------- ------------ ------------ ------------ ------------ Total assets 394,964,280 651,737,328 14,844,478 121,589,809 278,257,042 197,090,660 127,849,061 ------------ ------------ ----------- ------------ ------------ ------------ ------------ Liabilities: Payable for outstanding purchases 35,178 Accrued expenses and other payables 33,749 136,895 Transfer payables 394,964,280 651,737,328 14,775,551 121,452,914 278,257,042 197,090,660 127,849,061 ------------ ------------ ----------- ------------ ------------ ------------ ------------ Total liabilities 394,964,280 651,737,328 14,844,478 121,589,809 278,257,042 197,090,660 127,849,061 ------------ ------------ ----------- ------------ ------------ ------------ ------------ Net assets available for plan benefits $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 ============ ============ =========== ============ =========== =========== ==========
12 Participant Directed Non-Participant Directed RTN.A GMH Raytheon Wasting Wasting Loan Common Fund Fund Fund Stock Fund Total Assets: Master trust investments: At contract value: Bankers Trust $127,306,023 Prudential Insurance Company of America 63,749,776 Metropolitan Life Insurance Company 160,013,140 Fidelity 6,941,095 Connecticut General 1,758,843 Monumental Life Insurance Company 1,847,843 At fair value: Fidelity Equity Income Fund 651,737,328 Raytheon Company Common Stock Fund $58,683,500 73,241,166 BT Pyramid Equity Index Fund 120,795,352 Fidelity Balanced Fund 278,257,042 Fidelity Magellan Fund 197,090,660 Fidelity Blue Chip Fund 127,849,061 Raytheon Class A Wasting Stock Fund $108,893,951 108,893,951 Raytheon GMH Wasting Stock Fund $162,776,011 162,776,011 Loans receivable from participants $61,978,609 61,978,609 ------------ ------------ ----------- ----------- -------------- Total investments 108,893,951 162,776,011 61,978,609 58,683,500 $2,144,235,900 ------------ ------------ ----------- ----------- -------------- Receivables: Accrued investment income and other receivables 1,119,046 22,261 348,544 1,831,253 Cash and cash equivalents 3,263,646 5,154,881 807,628 43,313,582 ------------ ------------ ----------- ----------- -------------- Total assets 113,276,643 167,953,153 61,978,609 59,839,672 $2,189,380,735 ------------ ------------ ------------ ----------- -------------- Liabilities: Payable for outstanding purchases 141,806 176,984 Accrued expenses and other payables 39,112 61,256 136,044 407,056 Transfer payables 113,237,531 167,891,897 61,978,609 59,561,822 2,188,796,695 ------------ ------------ ------------ ----------- -------------- Total liabilities 113,276,643 167,953,153 61,978,609 59,839,672 2,189,380,735 ------------ ------------ ------------ ----------- -------------- Net assets available for plan benefits $ 0 $ 0 $ 0 $ 0 $ 0 ============ ============ =========== =========== ==============
13 I. Fund Data, Continued: The following is a summary of net assets available for plan benefits by fund as of December 31, 1997: Participant Directed 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 $47,101 Prudential Insurance Company of America 29,215 Metropolitan Life Insurance Company 49,797 At fair value: Fidelity Equity Income Fund* $534,021 Raytheon Company Common Stock* $92,888 BT Pyramid Equity Index Fund* $353,515 Fidelity Balanced Fund* $236,387 Fidelity Magellan Fund* $616,257 Fidelity Blue Chip Fund* -------- -------- ------- -------- -------- -------- Total investments 126,113 534,021 92,888 353,515 236,387 616,257 -------- -------- ------- -------- -------- -------- Receivables: Accrued investment income and other receivables 684 846 Cash and cash equivalents 1,239 1,681 3,469 -------- -------- ------- -------- -------- -------- Total assets 127,352 534,021 95,253 357,830 236,387 616,257 ------- -------- ------ -------- -------- -------- Liabilities: Payable for outstanding purchases 790 Accrued expenses and other payables 184 874 -------- -------- ------- -------- -------- -------- Total liabilities - - 974 874 - - -------- -------- ------- -------- -------- -------- Net assets available for plan benefits $127,352 $534,021 $94,279 $356,956 $236,387 $616,257 ======== ======== ======= ======== ======== ======== *Represents more than 5% of net assets available for plan benefits
14 Participant Non-Participant Directed Directed Raytheon Blue Chip Common Stock Fund Fund Total Assets: Master trust investments: At contract value: Bankers Trust $ 47,101 Prudential Insurance Company of America 29,215 Metropolitan Life Insurance Company 49,797 At fair value: Fidelity Equity Income Fund* 534,021 Raytheon Company Common Stock* $ 983,125 1,076,013 BT Pyramid Equity Index Fund* 353,515 Fidelity Balanced Fund* 236,387 Fidelity Magellan Fund* 616,257 Fidelity Blue Chip Fund* $412,066 412,066 -------- ---------- ---------- Total investments 412,066 983,125 3,354,372 -------- ---------- ---------- Receivables: Accrued investment income and other receivables 7,235 8,765 Cash and cash equivalents 17,792 24,181 -------- ---------- ---------- Total assets 412,066 1,008,152 3,387,318 -------- ---------- ---------- Liabilities: Payable for outstanding purchases 8,357 9,147 Accrued expenses and other payables 1,952 3,010 -------- ---------- ---------- Total liabilities - 10,309 12,157 -------- ---------- ---------- Net assets available for plan benefits $412,066 $997,843 $3,375,161 ======== ======== ========== *Represents more than 5% of net assets available for plan benefits
15 I. Fund Data, Continued: The following is a summary of changes in net assets available for plan benefits by fund for the year ended December 31, 1998: Participant Directed Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Blue Chip Fund Fund Stock Fund Fund Fund Fund Fund Additions to net assets attributable to: Investment income: Net appreciation (depreciation) of investments $ 14,612 $ 4,027,587 $ 172,647 $ 11,213,233 $ 5,237,269 $ 30,942,356 $ 12,147,296 Interest & Dividends 17,386,177 38,542,830 27,342,164 5,686,772 4,023,655 ----------- ------------ ----------- ------------ ------------ ------------ ------------ 17,400,789 42,570,417 172,647 11,213,233 32,579,433 36,629,128 16,170,951 ----------- ------------ ----------- ------------ ------------ ------------ ------------ Contributions and deferrals: Employee deferrals 8,515,762 32,008,106 5,907,352 22,808,656 14,594,485 36,210,972 25,587,270 Employer contributions Transfers 361,302,774 766,124,647 1,672,702 37,465,894 278,383,055 67,931,458 25,984,279 ------------ ------------ ----------- ----------- ------------ ------------ ------------ 369,818,536 798,132,753 7,580,054 60,274,550 292,977,540 104,142,430 51,571,549 ------------ ------------ ----------- ----------- ------------ ------------ ------------ Total additions 387,219,325 840,703,170 7,752,701 71,487,783 325,556,973 140,771,558 67,742,500 ------------ ------------ ----------- ----------- ------------ ------------ ------------ Deductions from net assets attributable to: Distributions to participants 23,020,443 39,602,569 421,273 4,795,113 15,326,570 7,096,289 4,276,242 Administrative expenses 18,237 41,185 355 2,804 15,918 4,294 2,901 Transfers (106) Transfers plan mergers 394,964,281 651,737,327 14,775,551 121,452,914 278,257,042 197,090,659 127,849,060 ------------ ------------ ----------- ------------ ------------ ------------ ------------ Total deductions 418,002,961 691,381,081 15,197,073 126,250,831 293,599,530 204,191,242 132,128,203 ------------ ------------ ----------- ------------ ------------ ------------ ------------ Interfund transfers 30,656,284 (149,856,110) 7,350,093 54,406,092 (32,193,830) 62,803,427 63,973,637 ------------ ------------ ----------- ------------ ------------ ------------ ------------ Decrease in net assets (127,352) (534,021) (94,279) (356,956) (236,387) (616,257) (412,066) Net assets, beginning of year 127,352 534,021 94,279 356,956 236,387 616,257 412,066 ------------ ------------ ----------- ----------- ------------ ------------ ------------ Net assets, end of year $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 ============ ============ =========== =========== ============ ============ ============
16 Participant Non-Participant Directed Directed RTN.A GMH Raytheon Wasting Wasting Loan Common Fund Fund Fund Stock Fund Total Additions to net assets attributable to: Investment income: Net appreciation (depreciation)of investments $ (94,427) $ 41,881,477 $ (446,612) $ 105,095,438 Interest & Dividends $ 3,108,811 20 96,090,429 ---------- ------------ ----------- ----------- -------------- (94,427) 41,881,477 3,108,811 (446,592) 201,185,867 ---------- ------------ ----------- ----------- -------------- Contributions and deferrals: Employee deferrals 145,632,603 Employer contributions 62,277,760 62,277,760 Transfers 141,098,893 160,233,523 49,546,119 123,749 1,889,867,093 ------------ ------------ ----------- ----------- -------------- 141,098,893 160,233,523 49,546,119 62,401,509 2,097,777,456 ----------- ------------ ----------- ----------- -------------- Total additions 141,004,466 202,115,000 52,654,930 61,954,917 2,298,963,323 ------------ ------------ ----------- ----------- -------------- Deductions from net assets attributable to: Distributions to participants 6,597,009 10,194,189 663,703 1,430,915 113,424,315 Administrative expenses 11,411 18,815 1,553 117,473 Transfers 106 Transfers plan mergers 113,237,533 167,891,898 61,978,609 59,561,822 2,188,796,696 ------------ ------------ ----------- ----------- -------------- Total deductions 119,845,953 178,104,902 62,642,312 60,994,396 2,302,338,484 ------------ ------------ ----------- ----------- -------------- Interfund transfers (21,158,513) (24,010,098) 9,987,382 (1,958,364) - ------------ ------------ ----------- ----------- -------------- Decrease in net assets - - - (997,843) (3,375,161) Net assets, beginning of year 997,843 3,375,161 ------------ ------------ ----------- ----------- --------------- Net assets, end of year $ 0 $ 0 $ 0 $ 0 $ 0 ============ ============ =========== =========== ===============
17 J. Master Trust: All plan investments are included under the Master Trust. At December 31, 1998, assets of the Plan represented 0% of the total assets under the Master Trust. This has decreased from .10% at December 31, 1997. The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1998: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $ 473,258,791 Prudential Life Insurance Company of America 236,989,116 Metropolitan Life Insurance Company* 594,847,154 Fidelity 25,803,449 Connecticut General 6,538,482 Monumental Life Insurance Company 6,869,338 At fair value: Fidelity Equity Income Fund* $1,464,615,296 Raytheon Company Common Stock Fund* $ 799,542,751 BT Pyramid Equity Index Fund* $ 745,602,791 Fidelity Balanced Fund* $ 442,796,289 Fidelity Magellan Fund* $ 379,680,454 Fidelity Blue Chip Fund* Templeton Foreign I Fund Fidelity Investment Grade Bond Fund Fidelity Retirement Money Market Vanguard Winsor Vanguard Wellesley TRP Small Cap Stock Raytheon Class A Wasting Stock Fund Raytheon GMH Wasting Stock Fund Loans receivable from participants -------------- -------------- -------------- -------------- -------------- -------------- Total investments 1,344,306,330 1,464,615,296 799,542,751 745,602,791 442,796,289 379,680,454 -------------- -------------- -------------- -------------- -------------- -------------- Receivables: Employer contribution Accrued investment income and other receivables 4,748,948 1,573,604 Transfer receivables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803 Cash and cash equivalents 123,969,201 11,004,025 3,330,147 -------------- -------------- -------------- -------------- -------------- -------------- Total assets 2,048,537,201 2,226,757,712 1,255,380,751 967,248,229 755,173,618 616,369,257 -------------- -------------- -------------- -------------- -------------- -------------- Liabilities: Payable for outstanding purchases 1,932,125 Accrued expenses and other payables 1,853,618 844,977 Transfer payables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803 -------------- -------------- -------------- -------------- -------------- -------------- Total liabilities 580,261,670 762,142,416 443,870,770 217,586,664 312,377,329 236,688,803 -------------- -------------- -------------- -------------- -------------- -------------- Net assets available for plan benefits $1,468,275,531 $1,464,615,296 $ 811,509,981 $ 749,661,565 $ 442,796,289 $ 379,680,454 ============== ============== ============== ============== ============== ==============
18 Templeton Investment Retirement Vanguard Vanguard Blue Chip Foreign I Grade Money Winsor Wellesley Fund Fund Bond Fund Market Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* Prudential Life Insurance Company of America Metropolitan Life Insurance Company* Fidelity Connecticut General Monumental Life Insurance Company At fair value: Fidelity Equity Income Fund* Raytheon Company Common Stock Fund* BT Pyramid Equity Index Fund* Fidelity Balanced Fund* Fidelity Magellan Fund* Fidelity Blue Chip Fund* $ 391,787,509 Templeton Foreign I Fund $ 6,966,704 Fidelity Investment Grade Bond Fund $ - Fidelity Retirement Money Market $ 13,202,524 Vanguard Winsor $ 41 Vanguard Wellesley $ 18 TRP Small Cap Stock Raytheon Class A Wasting Stock Fund Raytheon GMH Wasting Stock Fund Loans receivable from participants -------------- -------------- -------------- ------------- ------------- -------------- Total investments 391,787,509 $ 6,966,704 - 13,202,524 41 18 -------------- -------------- -------------- ------------- ------------- -------------- Receivables: Employer contribution 3,595,261 Accrued investment income and other receivables Transfer receivables 191,269,141 6,966,652 16,715,590 Cash and cash equivalents -------------- -------------- -------------- ------------- ------------- -------------- Total assets 583,056,650 13,933,356 - 33,513,375 41 18 -------------- -------------- -------------- ------------- ------------- -------------- Liabilities: Payable for outstanding purchases Accrued expenses and other payables Transfer payables 191,269,141 6,966,652 16,715,590 -------------- -------------- -------------- ------------- ------------- -------------- Total liabilities 191,269,141 6,966,652 - 16,715,590 - - -------------- -------------- -------------- ------------- ------------- -------------- Net assets available for plan benefits $ 391,787,509 $ 6,966,704 $ - $ 16,797,785 $ 41 $ 18 ============== ============== ============== ============== ============== ==============
19 TRP Small RTN.A GMH Cap Stock Wasting Wasting Loan Fund Fund Fund Fund Other(1) Total Assets: Investments: At contract value: Bankers Trust* $ 473,258,791 Prudential Life Insurance Company of America 236,989,116 Metropolitan Life Insurance Company* 594,847,154 Fidelity 25,803,449 Connecticut General 6,538,482 Monumental Life Insurance Company 6,869,338 At fair value: Fidelity Equity Income Fund* 1,464,615,296 Raytheon Company Common Stock Fund* 799,542,751 BT Pyramid Equity Index Fund* 745,602,791 Fidelity Balanced Fund* 442,796,289 Fidelity Magellan Fund* 379,680,454 Fidelity Blue Chip Fund* 391,787,509 Templeton Foreign I Fund 6,966,704 Fidelity Investment Grade Bond Fund - Fidelity Retirement Money Market 13,202,524 Vanguard Winsor 41 Vanguard Wellesley 18 TRP Small Cap Stock $ 348 348 Raytheon Class A Wasting Stock Fund $ 116,129,149 116,129,149 Raytheon GMH Wasting Stock Fund $ 172,859,819 172,859,819 Loans receivable from participants $ 250,687,865 250,687,865 -------------- -------------- -------------- -------------- ------------- -------------- Total investments 348 116,129,149 172,859,819 250,687,865 - 6,128,177,888 -------------- -------------- -------------- -------------- ------------- -------------- Receivables: Employer contribution 3,595,261 Accrued investment income and other receivables 1,193,397 23,640 7,539,589 Transfer receivables 120,761,325 178,295,618 117,046,618 $ 855,826,675 4,035,178,551 Cash and cash equivalents 3,480,490 5,474,220 147,258,083 -------------- -------------- -------------- ------------- -------------- -------------- Total assets 348 241,564,361 356,653,297 367,734,483 855,826,675 10,321,749,372 -------------- -------------- -------------- ------------- -------------- -------------- Liabilities: Payable for outstanding purchases 1,932,125 Accrued expenses and other payables 41,711 62,061 2,802,367 Transfer payables 120,761,325 178,295,618 117,046,618 3,179,351,876 -------------- -------------- -------------- ------------- -------------- -------------- Total liabilities - 120,803,036 178,357,679 117,046,618 - 3,184,086,368 -------------- -------------- -------------- ------------- -------------- -------------- Net assets available for plan benefits $ 348 $120,761,325 $ 178,295,618 $ 250,687,865 $ 855,826,675 $7,137,663,004 ============== ============== ============== ============== ============== ============== Percentage of Master Trust that are Plan assets - 0.00% *Represent more than 5% of net assets available for plan benefits (1) Other represents Raytheon plans merging in from outside the Master Trust. Note: Not all funds within the Master Trust are available options to participants in the Plan.
20 J. Master Trust, Continued: The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1997: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $351,035,073 Prudential Life Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* $782,799,011 Raytheon Company Common Stock Fund* $745,980,294 BT Pyramid Equity Index Fund* $484,781,406 Fidelity Balanced Fund $117,556,481 Fidelity Magellan Fund $91,863,155 Fidelity Blue Chip Fund Templeton Foreign I Fund Fidelity Investment Grade Bond Fund Fidelity Retirement Money Market Fund Loans receivable from participants ------------ ------------ ------------ ------------ ------------ ----------- Total investments 939,889,852 782,799,011 745,980,294 484,781,406 117,556,481 91,863,155 ------------ ------------ ------------ ------------ ------------ ----------- Receivables: Employer contribution Accrued investment income and other receivables 5,489,592 1,161,112 Cash and cash equivalents 9,232,100 13,498,051 4,761,268 ------------ ------------ ------------ ------------ ------------ ----------- Total assets 949,121,952 782,799,011 764,967,937 490,703,786 117,556,481 91,863,155 ------------ ------------ ------------ ------------ ------------ ----------- Liabilities: Payable for outstanding purchases 6,340,318 Accrued expenses and other payables 1,480,875 1,200,471 ------------- ------------ ------------ ------------ ------------ ----------- Total liabilities - - 7,821,193 1,200,471 - - ------------- ------------ ------------ ------------ ------------ ----------- Net assets available for plan benefits $949,121,952 $782,799,011 $757,146,744 $489,503,315 $117,556,481 $91,863,155 ============ ============ ============ ============ ============ ===========
21 Templeton Investment Retirement Blue Chip Foreign I Grade Money Loan Fund Fund Bond Fund Market Fund Fund Total Assets: Investments: At contract value: Bankers Trust* $351,035,073 Prudential Life Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* 782,799,011 Raytheon Company Common Stock Fund* 745,980,294 BT Pyramid Equity Index Fund* 484,781,406 Fidelity Balanced Fund 117,556,481 Fidelity Magellan Fund 91,863,155 Fidelity Blue Chip Fund $136,586,123 136,586,123 Templeton Foreign I Fund $5,471,176 5,471,176 Fidelity Investment Grade Bond Fund $1,548,125 1,548,125 Fidelity Retirement Money Market Fund $12,186,085 12,186,085 Loans receivable from participants $166,395,767 166,395,767 ------------ ---------- ---------- ----------- ------------ ------------- Total investments 136,586,123 5,471,176 1,548,125 12,186,085 166,395,767 3,485,057,475 ------------ ---------- ---------- ----------- ------------ -------------- Receivables: Employer contribution 4,015,100 4,015,100 Accrued investment income and other receivables 6,650,704 Cash and cash equivalents 27,491,419 ------------ ---------- ---------- ----------- ------------ -------------- Total assets 136,586,123 5,471,176 1,548,125 16,201,185 166,395,767 3,523,214,698 ------------ ---------- ---------- ----------- ------------ -------------- Liabilities: Payable for outstanding purchases 6,340,318 Accrued expenses and other payables 2,681,346 ------------ ---------- ---------- ----------- ------------ -------------- Total liabilities - - - - - 9,021,664 ------------ ---------- ---------- ----------- ------------ -------------- Net assets available for plan benefits $136,586,123 $5,471,176 $1,548,125 $16,201,185 $166,395,767 $3,514,193,034 ============ ========== ========== =========== ============ ============== Percentage of Master Trust that are Plan assets - 0.10% *Represent more than 5% of net assets available for plan benefits Note: Not all funds within the Master Trust are available options to participants in the Plan.
22 J. Master Trust, Continued: The following is a summary of investment income by fund under the Master Trust for the year ended December 31, 1998: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Investment income: Net appreciation (depreciation) of assets $ 30,695 $ 49,019,748 $74,202,083 $149,571,006 $16,091,158 $62,195,801 Interest & Dividends 81,886,632 86,279,682 1,792 42,537,357 13,255,763 ----------- ------------ ----------- ------------ ----------- ----------- Total investment income/(loss) $81,917,327 $135,299,430 $74,203,875 $149,571,006 $58,628,515 $75,451,564 =========== ============ =========== ============ =========== ===========
23 Templeton Investment Retirement Vanguard Vanguard Blue Chip Foreign I Grade Money Winsor Wellesley Fund Fund Bond Fund Market Fund Fund Fund Investment income: Net appreciation (depreciation) of assets $60,264,181 $(1,095,980) $ 17,635 $2,864,378 $1,379,950 Interest & Dividends 13,550,491 752,610 162,858 $ 349,740 ----------- ----------- -------- ---------- ---------- ---------- Total investment income/(loss) $73,814,672 $ (343,370) $180,493 $ 349,740 $2,864,378 $1,379,950 =========== =========== ======== ========== ========== ==========
24 TRP Small RTN.A GMH Cap Stock Wasting Wasting Loan Fund Fund Fund Fund Total Investment income: Net appreciation (depreciation) of assets $ 15 $ (35,268) $44,604,025 $459,109,427 Interest & Dividends $15,334,403 254,111,328 ----------- ---------- ----------- ----------- ------------ Total investment income/(loss) $ 15 $ (35,268) $44,604,025 $15,334,403 $713,220,755 =========== ========== =========== =========== ============
1 EXHIBIT 99.7a CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (File No. 333-56117) of Raytheon Company of our report dated June 4, 1999 relating to the financial statements of the Raytheon Salaried Savings and Investment Plan, which appears in this Form 10-K/A. PricewaterhouseCoopers Boston, Massachusetts June 29, 1999
1 EXHIBIT 99.8 RAYTHEON CALIFORNIA HOURLY SAVINGS AND INVESTMENT PLAN FINANCIAL STATEMENTS TO ACCOMPANY 1998 FORM 5500 ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN UNDER ERISA OF 1974 FOR THE YEAR ENDED DECEMBER 31, 1998 The supplemental schedules required to accompany the Plan's Form 5500 are not required since the Plan's assets are held in a Master Trust. Accordingly, the Plan administrator must file detailed financial information, including the supplemental schedules, separately with the Department of Labor.
2 Report of Independent Accountants To the Participants and Administrator of the Raytheon California Hourly Savings and Investment Plan: In our opinion, the accompanying statements of net assets available for plan benefits and the related statement of changes in net assets available for plan benefits present fairly, in all material respects, the net assets available for benefits of the Raytheon California Hourly Savings and Investment Plan (the "Plan") at December 31, 1998 and 1997, and the changes in net assets available for benefits for the year ended December 31, 1998 in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. As discussed in Notes A and H to the financial statements, the Board of Directors of Raytheon Company voted on December 16, 1998, to merge the Plan into the Raytheon Savings and Investment Plan. PricewaterhouseCoopers LLP Boston, Massachusetts June 4, 1999
3 RAYTHEON CALIFORNIA HOURLY SAVINGS AND INVESTMENT PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS as of December 31, 1998 and 1997 1998 1997 Assets: Master trust investments: At contract value (Notes B, E and I) $13,156,095 $ 9,712 At fair value (Notes B, F and I) 45,166,735 123,623 ----------- -------- 58,322,830 133,335 ----------- -------- Receivables: Accrued investment income and other receivables 46,484 367 Cash and cash equivalents 1,462,127 1,025 ----------- -------- Total assets 59,831,441 134,727 ----------- -------- Liabilities: Payable for outstanding purchases 5,897 405 Accrued expenses and other payables 6,633 112 Transfer payables (Note H) 59,818,911 ----------- -------- Total liabilities 59,831,441 517 ----------- -------- Net assets available for plan benefits $ - $134,210 =========== ======== The accompanying notes are an integral part of the financial statements.
4 RAYTHEON CALIFORNIA HOURLY SAVINGS AND INVESTMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS for the year ended December 31, 1998 Additions to net assets attributable to: Investment income (Notes B, E and I): Net appreciation of investments $ 2,660,598 Interest & Dividends 2,695,417 ----------- 5,356,015 Contributions and deferrals: Employee deferrals 4,746,859 Employer contributions 2,251,640 Transfers (Note G) 53,863,009 ----------- 60,861,508 Total additions 66,217,523 ----------- Deductions from net assets attributable to: Distributions to participants 6,300,175 Administrative expenses 6,092 Transfers (Note G and H) 60,045,466 ----------- Total deductions 66,351,733 ----------- Decrease in net assets (134,210) Net assets, beginning of year 134,210 ----------- Net assets, end of year $ 0 =========== The accompanying notes are an integral part of the financial statements.
5 RAYTHEON CALIFORNIA HOURLY SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS A. Description of Plan: General As more fully described in Note H, the Raytheon California Hourly Savings and Investment Plan (the "Plan") ceased to exist as of December 31, 1998 and effective January 1, 1999, the Plan was merged into the Raytheon Savings and Investment Plan (RAYSIP). The following description of the Plan provides only general information that is applicable through December 31, 1998. Participants should refer to the plan document for a complete description of the Plan's provisions. The Plan, which was established on December 18, 1997, is a defined contribution plan covering certain employees of Raytheon Company (the "Company"). Effective December 18, 1997, General Motors Corporation employees assumed in connection with the merger of the defense business of Hughes Electronics Corporation with the Company (hereafter referred to as the "Hughes transaction"), that participated in the Hughes California Hourly Employees' Thrift and Savings Plan, became eligible to participate in the Plan. Participants had the option to rollover amounts accumulated in plans sponsored by General Motors Corporation to the Plan. The option to make a rollover election extended until December 1, 1998. To participate in the Plan, eligible employees must have three months of service and may enter the Plan only on the first day of each month. The purpose of the Plan is to provide participants with a tax-effective means of meeting both short and long-term investment objectives. The Plan is intended to be a "qualified cash or deferred arrangement" under the Internal Revenue Code (the "Code"). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan's investments are combined with the investments of other similar defined contribution plans of Raytheon Company into the Raytheon Company Master Trust for Defined Contribution Plans ("Master Trust"). The trustee of the Master Trust maintains a separate account reflecting the equitable share in the Trust of each plan. Investment income and administrative expenses relating to the Master Trust are allocated to the individual plans based upon average monthly balances invested by each plan.
6 Contributions and Deferrals Eligible employees are allowed to defer to the Plan up to 12% of their salaries. The Company contributes amounts equal to 100% of each participant's deferral, up to a maximum of 4% of the participant's salary. The contributions are invested in Raytheon Company common stock for two full plan years following the plan year for which the contributions are made, and are then allocated to participants' accounts. For 1998, the annual employee deferral for a participant cannot exceed $10,000. Rollover contributions from other qualified plans are accepted by the Plan. Participants may invest their deferrals in increments of 1% in any combination of seven funds: (a) a Fixed Income Fund under which assets are invested primarily in contracts providing for fixed rates of interest for specified periods of time, (b) the Fidelity Equity Income Fund which invests in shares of a mutual fund consisting primarily of income-producing equity securities, (c) a Raytheon Common Stock Fund which invests in shares of Raytheon Company common stock, (d) a Stock Index Fund which invests in a commingled pool consisting primarily of equity securities and is designed to track the S&P 500 Index, (e) the Fidelity Balanced Fund which invests in shares of a mutual fund consisting primarily of equity securities, bonds and money market instruments, (f) the Fidelity Magellan Fund, a growth fund which invests primarily in equities of companies of all types and sizes, and (g) the Fidelity Blue Chip Fund, a growth fund which invests primarily in equities of well known and established companies. Amounts held in the RTN-A Wasting Fund and GMH Wasting Fund are shares of Raytheon Company Class A common stock or General Motors Class H common stock, respectively, that were transferred into the Plan as a result of the Hughes transaction. These options are not open for additional contributions and will only be available through December 31, 2002. Dividends and distributions from investments of the Fidelity Equity Income Fund, the Raytheon Common Stock Fund, the Stock Index Fund, the Fidelity Balanced Fund, the Fidelity Magellan Fund, the Fidelity Blue Chip Fund, the RTN-A Wasting Fund and the GHM Wasting Fund are reinvested in their respective funds; stock dividends, stock splits and similar changes are also reflected in the funds. Participant Accounts Each participant's account is credited with the participant's deferral, the Company's contribution and an allocation of plan earnings. Plan earnings are allocated based on account balances by fund. Vesting Participants are immediately vested in their voluntary deferrals plus actual earnings thereon. Vesting requirements for employer contributions plus earnings thereon may vary depending upon when an employee became eligible to participate in the Plan. Vesting generally occurs upon completion of five years of service or upon three years of participation or upon retirement, death, disability, or attainment of normal retirement age. Forfeitures of the nonvested portions of terminated participants' accounts are used to reduce required contributions of the Company.
7 Distributions to Participants A participant may withdraw all or a portion of deferrals, employer contributions and related earnings upon attainment of age 59 1/2. For reasons of financial hardship, as defined in the Plan document, a participant may withdraw all or a portion of deferrals. On termination of employment, a participant will receive a lump-sum distribution unless the vested account is valued in excess of $3,500 and the participant elects to defer distribution. A retiree or a beneficiary of a deceased participant may defer the distribution until January of the year following attainment of age 65. Loans to Participants A participant may borrow against a portion of the balance in the participant's account, subject to certain restrictions. The maximum amount of a loan is the lesser of one-half of the participant's vested account balance or $50,000. The minimum loan which may be granted is $500. The interest rate applied is equal to the prime rate published in the Wall Street Journal on the first business day in June and December of each year. Loans must be repaid over a period of up to 5 years by means of payroll deductions. In certain cases, the repayment period may be extended up to 15 years. Interest paid to the Plan on loans to participants is credited to the borrower's account in the investment fund to which repayments are made. Administrative Expenses Substantially all expenses of administering the Plan are paid by the plan participants. B. Summary of Significant Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting. The Plan's investment contracts are fully benefit-responsive and are therefore included in the financial statements at their contract value, defined as net contributions and deferrals plus interest earned on the underlying investments at contracted rates. Contract value approximates fair value. Investments in mutual funds and the commingled pool are valued at the closing net asset value reported on the last business day of the year. Investments in securities (common stocks) traded on a national securities exchange are valued at the last reported sales price on the last business day of the year. Cash equivalents are short-term money market instruments and are valued at cost, which approximates fair value. Participant loans are valued at cost, which approximates fair value.
8 Security transactions are recorded on the trade date. Except for its investment contracts (Note E), the Plan's investments are held by bank-administered trust funds. Payables for outstanding security transactions represent trades which have occurred but have not yet settled. The Plan presents in the statement of changes in net assets the net appreciation (depreciation) in the fair value of its investments which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. Dividend income is recorded on the ex-dividend date. Income from other investments is recorded as earned on an accrual basis. Investment income includes both dividend and interest income. Benefits are recorded when paid. The preparation of the financial statements in conformity with generally accepted accounting principles requires the Plan administrator to make significant estimates and assumptions that affect the reported amounts of net assets and liabilities available for benefits at the date of the financial statements and the change in net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from the estimates included in the financial statements. The Plan provides for various investment options in any combination of stocks, bonds, fixed income securities, mutual funds and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the statement of net assets available for plan benefits and the statement of changes in net assets available for plan benefits. C. Federal Income Tax Status: The Internal Revenue Service has determined and informed the Company by letter dated February 1999 that the Plan, as adopted on December 18, 1997, and related Trust are designed in accordance with applicable sections of the Code. The Plan has been amended since applying for the determination letter. However, the Plan administrator and the Plan's legal counsel believe that the Plan is currently designed and being operated in compliance with applicable requirements of the Code. Therefore, no provision for income taxes has been included in the Plan's financial statements.
9 D. Plan Termination: Although it has not expressed any intention to do so, the Company reserves the right under the Plan at any time or times to discontinue its contributions and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, amounts in participants' accounts will be distributed in a single lump sum; if the participant does not consent to an immediate distribution, the amount can be transferred to another defined contribution plan sponsored by the Company. E. Investment Contracts: The Plan invests in collateralized fixed income investment portfolios which are managed by insurance companies and investment management firms. The credited interest rates are adjusted semiannually to reflect the experienced and anticipated yields to be earned on such investments, based on their book value. The annualized average yield and credited interest rates were as follows: Annualized Credited Average Yield Interest Rate For the year ended December 31, 1998: Banker's Trust (WBS 92-485) 6.85% 6.85% Metropolitan Life Insurance Company (GIC GA-12908) 6.58% 6.58 Metropolitan Life Insurance Company (GIC GA-13659) 6.10% 6.10% Prudential Asset Management Company (GIC 917163-001) 6.75% 6.75% Connecticut General (GIC 0025174) 5.58% 5.58% Fidelity IPL (633-GCDC) 5.62% 5.62% Monumental Life Insurance Company (GIC BDA00463FR-00) 7.84% 7.84% For the year ended December 31, 1997: Banker's Trust (WBS 92-485) 6.95% 6.95% Metropolitan Life Insurance Company (GIC GA-12908) 6.86% 6.86% Metropolitan Life Insurance Company (GIC GA-13659) 6.43% 6.43% Prudential Asset Management Company (GIC 917163-001) 6.99% 6.99% The contract values are subject to limitations in certain situations including large workforce reductions and plan termination. In the financial statements the two Metropolitan Life Insurance Company contracts are recorded as one investment option. F. Related Party Transactions: The Plan's trustee is Fidelity Management Trust Company (the "Trustee"). The Trustee holds the funds for the Plan and is responsible for managing the Plan's investment assets, executing all investment transactions, recording approved transactions, and, therefore these transactions qualify as party-in-interest. In accordance with the provisions of the Plan, the Trustee acts as the Plan's agent for purchases and sales of shares of Raytheon Company common stock. These transactions are performed on a Master Trust level. For the Master Trust, purchases amounted to $288,116,995 and sales amounted to $257,878,566 for the year ended December 31, 1998.
10 G. Transfers: Transfers include transfers of participant accounts, individually and/or in groups, between the Plan and other plans included in the Raytheon Company Master Trust for those participants, and/or groups of participants, who changed plans during the year. Transfers also include transfers of participant accounts, individually and/or in groups, between the Plan and similar savings plans of other companies for those participants who changed companies during the year. During the year, amounts rolled over by former employees of General Motors Corporation who participated in the Hughes California Hourly Employees' Thrift and Savings Plan and who became eligible to participate in the Plan totaled $42,657,803. H. Transfer Payables: As part of an overall effort to minimize plan design differences and increase administrative efficiencies, the Board of Directors of Raytheon Company voted on December 16, 1998 to merge the participants and their account balances into the RAYSIP. The Plan ceased to exist on December 31, 1998 and effective January 1, 1999 the plan provisions of the RAYSIP govern. The transfer payable amount represents a complete transfer of assets to the RAYSIP.
11 I. Fund Data: The following is a summary of net assets available for plan benefits by fund as of December 31, 1998: Participant Directed Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Blue Chip Fund Fund Stock Fund Fund Fund Fund Fund Assets: Master trust investments: At contract value: Bankers Trust $4,631,562 Prudential Insurance Company of America 2,319,301 Metropolitan Life Insurance Company 5,821,490 Fidelity 252,526 Connecticut General 63,989 Monumental Life Insurance Company 67,227 At fair value: Fidelity Equity Income Fund $17,602,036 Raytheon Company Common Stock Fund $606,765 BT Pyramid Equity Index Fund $1,294,913 Fidelity Balanced Fund $5,784,869 Fidelity Magellan Fund $3,839,079 Fidelity Blue Chip Fund $3,778,025 Raytheon Class A Wasting Stock Fund Raytheon GMH Wasting Stock Fund Loans receivable from participants ----------- ----------- -------- ---------- ---------- ---------- ---------- Total investments 13,156,095 17,602,036 606,765 1,294,913 5,784,869 3,839,079 3,778,025 ----------- ----------- -------- ---------- ---------- ---------- ---------- Receivables: Accrued investment income and other receivables 3,604 2,733 Cash and cash equivalents 1,213,229 8,351 5,784 ----------- ----------- -------- ---------- ---------- ---------- ---------- Total assets 14,369,324 17,602,036 618,720 1,303,430 5,784,869 3,839,079 3,778,025 ----------- ----------- -------- ---------- ---------- ---------- ---------- Liabilities: Payable for outstanding purchases 1,466 Accrued expenses and other payables 1,407 1,467 Transfer payables 14,369,324 17,602,036 615,847 1,301,963 5,784,869 3,839,079 3,778,025 ----------- ----------- -------- ---------- ---------- ---------- ---------- Total liabilities 14,369,324 17,602,036 618,720 1,303,430 5,784,869 3,839,079 3,778,025 ----------- ----------- -------- ----------- ---------- ---------- ---------- Net assets available for plan benefits $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 =========== =========== ======== ========== ========== ========== ==========
12 Participant Directed Non-Participant Directed RTN.A GMH Raytheon Wasting Wasting Loan Common Fund Fund Fund Stock Fund Total Assets: Master trust investments: At contract value: Bankers Trust $ 4,631,562 Prudential Insurance Company of America 2,319,301 Metropolitan Life Insurance Company 5,821,490 Fidelity 252,526 Connecticut General 63,989 Monumental Life Insurance Company 67,227 At fair value: Fidelity Equity Income Fund 17,602,036 Raytheon Company Common Stock Fund $1,833,397 2,440,162 BT Pyramid Equity Index Fund 1,294,913 Fidelity Balanced Fund 5,784,869 Fidelity Magellan Fund 3,839,079 Fidelity Blue Chip Fund 3,778,025 Raytheon Class A Wasting Stock Fund $2,794,160 2,794,160 Raytheon GMH Wasting Stock Fund $3,972,028 3,972,028 Loans receivable from participants $3,661,463 3,661,463 ---------- ---------- ---------- ---------- ----------- Total investments 2,794,160 3,972,028 3,661,463 1,833,397 58,322,830 ---------- ---------- ---------- ---------- ----------- Receivables: Accrued investment income and other receivables 28,714 543 10,890 46,484 Cash and cash equivalents 83,743 125,788 25,232 1,462,127 ---------- ---------- ---------- ---------- ----------- Total assets 2,906,617 4,098,359 3,661,463 1,869,519 59,831,441 ---------- ---------- ---------- ---------- ----------- Liabilities: Payable for outstanding purchases 4,431 5,897 Accrued expenses and other payables 1,004 (1,495) 4,250 6,633 Transfer payables 2,905,613 4,099,854 3,661,463 1,860,838 59,818,911 ---------- ---------- ---------- ---------- ----------- Total liabilities 2,906,617 4,098,359 3,661,463 1,869,519 59,831,441 ---------- ---------- ---------- ---------- ----------- Net assets available for plan benefits $ 0 $ 0 $ 0 $ 0 $ 0 ========== ========== ========== ========== ===========
13 I. Fund Data, Continued: The following is a summary of net assets available for plan benefits by fund as of December 31, 1997: Participant Directed 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 $3,627 Prudential Insurance Company of America 2,250 Metropolitan Life Insurance Company 3,835 At fair value: Fidelity Equity Income Fund* $21,159 Raytheon Company Common Stock Fund* $6,484 BT Pyramid Equity Index Fund* $6,823 Fidelity Balanced Fund* $9,931 Fidelity Magellan Fund* $23,519 Fidelity Blue Chip Fund* ------ -------- ------ ------ ------ ------- Total investments 9,712 21,159 6,484 6,823 9,931 23,519 ------ -------- ------ ------ ------ ------- Receivables: Accrued investment income and other receivables 48 16 Cash and cash equivalents 95 117 67 ------ ------- ------ ------ ------ ------- Total assets 9,807 21,159 6,649 6,906 9,931 23,519 ------ ------- ------ ------ ------ ------- Liabilities: Payable for outstanding purchases 55 Accrued expenses and other payables 13 17 ------ ------- ------ ------ ------ ------ Total liabilities - - 68 17 - - ------ ------- ------ ------ ------ ------ Net assets available for plan benefits $9,807 $21,159 $6,581 $6,889 $9,931 $23,519 ====== ======= ====== ====== ====== ======= *Represents more than 5% of net assets available for plan benefits
14 Participant Non-Participant Directed Directed Raytheon Blue Chip Common Stock Fund Fund Total Assets: Master trust investments: At contract value: Bankers Trust $ 3,627 Prudential Insurance Company of America 2,250 Metropolitan Life Insurance Company 3,835 At fair value: Fidelity Equity Income Fund* 21,159 Raytheon Company Common Stock Fund* $41,198 47,682 BT Pyramid Equity Index Fund* 6,823 Fidelity Balanced Fund* 9,931 Fidelity Magellan Fund* 23,519 Fidelity Blue Chip Fund* $14,509 14,509 ------- ------- -------- Total investments 14,509 41,198 133,335 ------- ------- -------- Receivables: Accrued investment income and other receivables 303 367 Cash and cash equivalents 746 1,025 ------- ------- -------- Total assets 14,509 42,247 134,727 ------- ------- -------- Liabilities: Payable for outstanding purchases 350 405 Accrued expenses and other payables 82 112 ------- ------ -------- Total liabilities - 432 517 ------- ------ -------- Net assets available for plan benefits $14,509 $41,815 $134,210 ======= ======= ======== *Represents more than 5% of net assets available for plan benefits.
15 I. Fund Data, Continued: The following is a summary of changes in net assets available for plan benefits by fund for the year ended December 31, 1998: Participant Directed Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Blue Chip Fund Fund Stock Fund Fund Fund Fund Fund Additions to net assets attributable to: Investment income: Net appreciation (depreciation) of investments $ 487 $ 279,100 $ 2,444 $ 155,645 $ 211,808 $ 518,691 $ 411,361 Interest & Dividends 685,891 1,070,260 527,332 119,117 94,767 ---------- ---------- -------- ---------- ---------- ---------- ---------- 686,378 1,349,360 2,444 155,645 739,140 637,808 506,128 ---------- ---------- -------- ---------- ---------- ---------- ---------- Contributions and deferrals: Employee deferrals 636,436 1,171,220 359,135 372,864 545,647 982,845 678,712 Employer contributions Transfers 13,971,622 20,431,686 190,254 409,087 5,181,006 1,309,105 915,486 ----------- ---------- -------- ---------- ---------- ---------- ---------- 14,608,058 21,602,906 549,389 781,951 5,726,653 2,291,950 1,594,198 ----------- ---------- -------- ---------- ---------- ---------- ---------- Total additions 15,294,436 22,952,266 551,833 937,596 6,465,793 2,929,758 2,100,326 ----------- ---------- -------- ---------- ---------- ---------- ---------- Deductions from net assets attributable to: Distributions to participants 1,741,442 1,891,513 40,616 120,674 581,216 288,342 156,975 Administrative expenses 1,513 1,903 30 42 583 137 120 Transfers 10,341 Transfers plan mergers 14,369,324 17,602,036 615,847 1,301,963 5,784,869 3,839,079 3,778,025 ----------- ---------- -------- ---------- ---------- ---------- ---------- Total deductions 16,112,279 19,495,452 666,834 1,422,679 6,366,668 4,127,558 3,935,120 ----------- ---------- -------- ---------- ---------- ---------- ---------- Interfund transfers 808,036 (3,477,973) 108,420 478,194 (109,056) 1,174,281 1,820,285 ---------- ---------- -------- ---------- ---------- ---------- ---------- Decrease in net assets (9,807) (21,159) (6,581) (6,889) (9,931) (23,519) (14,509) Net assets, beginning of year 9,807 21,159 6,581 6,889 9,931 23,519 14,509 ---------- ---------- -------- ---------- ---------- ---------- ---------- Net assets, end of year $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 ========== ========== ======== ========== ========== ========== ==========
16 Participant Directed Non-Participant Directed RTN.A GMH Raytheon Wasting Wasting Loan Common Fund Fund Fund Stock Fund Total Additions to net assets attributable to: Investment income: Net appreciation (depreciation) of investments $ 45,904 $ 1,049,401 $ (14,243) $ 2,660,598 Interest & Dividends $ 198,050 2,695,417 ---------- ----------- ---------- ---------- ----------- 45,904 1,049,401 198,050 (14,243) 5,356,015 ---------- ----------- ---------- ---------- ----------- Contributions and deferrals: Employee deferrals 4,746,859 Employer contributions 2,251,640 2,251,640 Transfers 3,913,209 4,542,582 2,998,972 53,863,009 ---------- ---------- ---------- ---------- ----------- 3,913,209 4,542,582 2,998,972 2,251,640 60,861,508 ---------- ---------- ---------- ---------- ----------- Total additions 3,959,113 5,591,983 3,197,022 2,237,397 66,217,523 ---------- ---------- ---------- ---------- ----------- Deductions from net assets attributable to: Distributions to participants 433,298 628,930 222,868 194,301 6,300,175 Administrative expenses 646 1,063 55 6,092 Transfers 45,461 58,878 111,875 226,555 Transfers plan mergers 2,905,613 4,099,854 3,661,463 1,860,838 59,818,911 ---------- ---------- ---------- ---------- ----------- Total deductions 3,385,018 4,788,725 3,884,331 2,167,069 66,351,733 ---------- ---------- ---------- ---------- ----------- Interfund transfers (574,095) (803,258) 687,309 (112,143) - ---------- ---------- ---------- ---------- ----------- Decrease in net assets - - - (41,815) (134,210) Net assets, beginning of year - - - 41,815 134,210 ---------- ---------- ---------- ---------- ----------- Net assets, end of year $ 0 $ 0 $ 0 $ 0 $ 0 ========== ========== ========== ========== ===========
17 J. Master Trust: All plan investments are included under the Master Trust. At December 31, 1998, assets of the Plan represented 0% of the total assets under the Master Trust. This has decreased from .004% at December 31, 1997. The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1998: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $ 473,258,791 Prudential Life Insurance Company of America 236,989,116 Metropolitan Life Insurance Company* 594,847,154 Fidelity 25,803,449 Connecticut General 6,538,482 Monumental Life Insurance Company 6,869,338 At fair value: Fidelity Equity Income Fund* $1,464,615,296 Raytheon Company Common Stock Fund* $ 799,542,751 BT Pyramid Equity Index Fund* $ 745,602,791 Fidelity Balanced Fund* $ 442,796,289 Fidelity Magellan Fund* $ 379,680,454 Fidelity Blue Chip Fund* Templeton Foreign I Fund Fidelity Investment Grade Bond Fund Fidelity Retirement Money Market Vanguard Winsor Vanguard Wellesley TRP Small Cap Stock Raytheon Class A Wasting Stock Fund Raytheon GMH Wasting Stock Fund Loans receivable from participants -------------- -------------- -------------- -------------- -------------- -------------- Total investments 1,344,306,330 1,464,615,296 799,542,751 745,602,791 442,796,289 379,680,454 -------------- -------------- -------------- -------------- -------------- -------------- Receivables: Employer contribution Accrued investment income and other receivables 4,748,948 1,573,604 Transfer receivables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803 Cash and cash equivalents 123,969,201 11,004,025 3,330,147 -------------- -------------- -------------- -------------- -------------- -------------- Total assets 2,048,537,201 2,226,757,712 1,255,380,751 967,248,229 755,173,618 616,369,257 -------------- -------------- -------------- -------------- -------------- -------------- Liabilities: Payable for outstanding purchases 1,932,125 Accrued expenses and other payables 1,853,618 844,977 Transfer payables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803 -------------- -------------- -------------- -------------- -------------- -------------- Total liabilities 580,261,670 762,142,416 443,870,770 217,586,664 312,377,329 236,688,803 -------------- -------------- -------------- -------------- -------------- -------------- Net assets available for plan benefits $1,468,275,531 $1,464,615,296 $ 811,509,981 $ 749,661,565 $ 442,796,289 $ 379,680,454 ============== ============== ============== ============== ============== ==============
18 Templeton Investment Retirement Vanguard Vanguard Blue Chip Foreign I Grade Money Winsor Wellesley Fund Fund Bond Fund Market Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* Prudential Life Insurance Company of America Metropolitan Life Insurance Company* Fidelity Connecticut General Monumental Life Insurance Company At fair value: Fidelity Equity Income Fund* Raytheon Company Common Stock Fund* BT Pyramid Equity Index Fund* Fidelity Balanced Fund* Fidelity Magellan Fund* Fidelity Blue Chip Fund* $ 391,787,509 Templeton Foreign I Fund $ 6,966,704 Fidelity Investment Grade Bond Fund $ - Fidelity Retirement Money Market $ 13,202,524 Vanguard Winsor $ 41 Vanguard Wellesley $ 18 TRP Small Cap Stock Raytheon Class A Wasting Stock Fund Raytheon GMH Wasting Stock Fund Loans receivable from participants -------------- -------------- -------------- ------------- ------------- -------------- Total investments 391,787,509 6,966,704 - 13,202,524 41 18 Receivables: Employer contribution 3,595,261 Accrued investment income and other receivables Transfer receivables 191,269,141 6,966,652 16,715,590 Cash and cash equivalents -------------- -------------- -------------- ------------- ------------- -------------- Total assets 583,056,650 13,933,356 - 33,513,375 41 18 -------------- -------------- -------------- ------------- ------------- -------------- Liabilities: Payable for outstanding purchases Accrued expenses and other payables Transfer payables 191,269,141 6,966,652 16,715,590 -------------- -------------- -------------- ------------- ------------- -------------- Total liabilities 191,269,141 6,966,652 - 16,715,590 - - -------------- -------------- -------------- ------------- ------------- -------------- Net assets available for plan benefits $ 391,787,509 $ 6,966,704 $ - $ 16,797,785 $ 41 $ 18 ============== ============== ============== ============== ============== ==============
19 TRP Small RTN.A GMH Cap Stock Wasting Wasting Loan Fund Fund Fund Fund Other(1) Total Assets: Investments: At contract value: Bankers Trust* $ 473,258,791 Prudential Life Insurance Company of America 236,989,116 Metropolitan Life Insurance Company* 594,847,154 Fidelity 25,803,449 Connecticut General 6,538,482 Monumental Life Insurance Company 6,869,338 At fair value: Fidelity Equity Income Fund* 1,464,615,296 Raytheon Company Common Stock Fund* 799,542,751 BT Pyramid Equity Index Fund* 745,602,791 Fidelity Balanced Fund* 442,796,289 Fidelity Magellan Fund* 379,680,454 Fidelity Blue Chip Fund* 391,787,509 Templeton Foreign I Fund 6,966,704 Fidelity Investment Grade Bond Fund - Fidelity Retirement Money Market 13,202,524 Vanguard Winsor 41 Vanguard Wellesley 18 TRP Small Cap Stock $ 348 348 Raytheon Class A Wasting Stock Fund $ 116,129,149 116,129,149 Raytheon GMH Wasting Stock Fund $ 172,859,819 172,859,819 Loans receivable from participants $ 250,687,865 250,687,865 -------------- -------------- -------------- -------------- ------------- -------------- Total investments 348 116,129,149 172,859,819 250,687,865 - 6,128,177,888 -------------- -------------- -------------- -------------- ------------- -------------- Receivables: Employer contribution 3,595,261 Accrued investment income and other receivables 1,193,397 23,640 7,539,589 Transfer receivables 120,761,325 178,295,618 117,046,618 $ 855,826,675 4,035,178,551 Cash and cash equivalents 3,480,490 5,474,220 147,258,083 -------------- -------------- -------------- ------------- -------------- -------------- Total assets 348 241,564,361 356,653,297 367,734,483 855,826,675 10,321,749,372 -------------- -------------- -------------- ------------- -------------- -------------- Liabilities: Payable for outstanding purchases 1,932,125 Accrued expenses and other payables 41,711 62,061 2,802,367 Transfer payables 120,761,325 178,295,618 117,046,618 3,179,351,876 -------------- -------------- -------------- ------------- -------------- -------------- Total liabilities - 120,803,036 178,357,679 117,046,618 - 3,184,086,368 -------------- -------------- -------------- ------------- -------------- -------------- Net assets available for plan benefits $ 348 $120,761,325 $ 178,295,618 $ 250,687,865 $ 855,826,675 $7,137,663,004 ============== ============== ============== ============== ============== ============== Percentage of Master Trust that are Plan assets - 0.00% *Represent more than 5% of net assets available for plan benefits (1) Other represents Raytheon plans merging in from outside the Master Trust. Note: Not all funds within the Master Trust are available options to participants in the Plan.
20 RAYTHEON SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS, CONTINUED J. Master Trust, Continued: The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1997: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $351,035,073 Prudential Life Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* $782,799,011 Raytheon Company Common Stock Fund* $745,980,294 BT Pyramid Equity Index Fund* $484,781,406 Fidelity Balanced Fund $117,556,481 Fidelity Magellan Fund $91,863,155 Fidelity Blue Chip Fund Templeton Foreign I Fund Fidelity Investment Grade Bond Fund Fidelity Retirement Money Market Fund Loans receivable from participants ------------ ------------ ------------ ------------ ------------ ----------- Total investments 939,889,852 782,799,011 745,980,294 484,781,406 117,556,481 91,863,155 ------------ ------------ ------------ ------------ ------------ ----------- Receivables: Employer contribution Accrued investment income and other receivables 5,489,592 1,161,112 Cash and cash equivalents 9,232,100 13,498,051 4,761,268 ------------ ------------ ------------ ------------ ------------ ----------- Total assets 949,121,952 782,799,011 764,967,937 490,703,786 117,556,481 91,863,155 ------------ ------------ ------------ ------------ ------------ ----------- Liabilities: Payable for outstanding purchases 6,340,318 Accrued expenses and other payables 1,480,875 1,200,471 ------------- ------------ ------------ ------------ ------------ ----------- Total liabilities - - 7,821,193 1,200,471 - - ------------- ------------ ------------ ------------ ------------ ----------- Net assets available for plan benefits $949,121,952 $782,799,011 $757,146,744 $489,503,315 $117,556,481 $91,863,155 ============ ============ ============ ============ ============ ===========
21 Templeton Investment Retirement Blue Chip Foreign I Grade Money Loan Fund Fund Bond Fund Market Fund Fund Total Assets: Investments: At contract value: Bankers Trust* $351,035,073 Prudential Life Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* 782,799,011 Raytheon Company Common Stock Fund* 745,980,294 BT Pyramid Equity Index Fund* 484,781,406 Fidelity Balanced Fund 117,556,481 Fidelity Magellan Fund 91,863,155 Fidelity Blue Chip Fund $136,586,123 136,586,123 Templeton Foreign I Fund $5,471,176 5,471,176 Fidelity Investment Grade Bond Fund $1,548,125 1,548,125 Fidelity Retirement Money Market Fund $12,186,085 12,186,085 Loans receivable from participants $166,395,767 166,395,767 ------------ ---------- ---------- ----------- ------------ ------------- Total investments 136,586,123 5,471,176 1,548,125 12,186,085 166,395,767 3,485,057,475 ------------ ---------- ---------- ----------- ------------ -------------- Receivables: Employer contribution 4,015,100 4,015,100 Accrued investment income and other receivables 6,650,704 Cash and cash equivalents 27,491,419 ------------ ---------- ---------- ----------- ------------ -------------- Total assets 136,586,123 5,471,176 1,548,125 16,201,185 166,395,767 3,523,214,698 Liabilities: Payable for outstanding purchases 6,340,318 Accrued expenses and other payables 2,681,346 ------------ ---------- ---------- ----------- ------------ -------------- Total liabilities - - - - - 9,021,664 ------------ ---------- ---------- ----------- ------------ -------------- Net assets available for plan benefits $136,586,123 $5,471,176 $1,548,125 $16,201,185 $166,395,767 $3,514,193,034 ============ ========== ========== =========== ============ ============== Percentage of Master Trust that are Plan assets - 0.004% *Represent more than 5% of net assets available for plan benefits Note: Not all funds within the Master Trust are available options to participants in the Plan.
22 RAYTHEON SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS, CONTINUED J. Master Trust, Continued: The following is a summary of investment income by fund under the Master Trust for the year ended December 31, 1998: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Investment income: Net appreciation (depreciation) of assets $ 30,695 $ 49,019,748 $74,202,083 $149,571,006 $16,091,158 $62,195,801 Interest & Dividends 81,886,632 86,279,682 1,792 42,537,357 13,255,763 ----------- ------------ ----------- ------------ ----------- ----------- Total investment income/(loss) $81,917,327 $135,299,430 $74,203,875 $149,571,006 $58,628,515 $75,451,564 =========== ============ =========== ============ =========== ===========
23 Templeton Investment Retirement Vanguard Vanguard Blue Chip Foreign I Grade Money Winsor Wellesley Fund Fund Bond Fund Market Fund Fund Fund Investment income: Net appreciation (depreciation) of assets $60,264,181 $(1,095,980) $ 17,635 $2,864,378 $1,379,950 Interest & Dividends 13,550,491 752,610 162,858 $ 349,740 ----------- ----------- -------- ---------- ---------- ---------- Total investment income/(loss) $73,814,672 $ (343,370) $180,493 $ 349,740 $2,864,378 $1,379,950 =========== =========== ======== ========== ========== ==========
24 TRP Small RTN.A GMH Cap Stock Wasting Wasting Loan Fund Fund Fund Fund Total Investment income: Net appreciation (depreciation) of assets $ 15 $ (35,268) $44,604,025 $459,109,427 Interest & Dividends $15,334,403 254,111,328 ----------- ---------- ----------- ----------- ------------ Total investment income/(loss) $ 15 $ (35,268) $44,604,025 $15,334,403 $713,220,755 =========== ========== =========== =========== ============
1 EXHIBIT 99.8a CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (File No. 333-56117) of Raytheon Company of our report dated June 4, 1999 relating to the financial statements of the Raytheon California Hourly Savings and Investment Plan, which appears in this Form 10-K/A. PricewaterhouseCoopers LLP Boston, Massachusetts June 29, 1999
1 EXHIBIT 99.9 RAYTHEON TUCSON BARGAINING SAVINGS AND INVESTMENT PLAN FINANCIAL STATEMENTS TO ACCOMPANY 1998 FORM 5500 ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN UNDER ERISA OF 1974 FOR THE YEAR ENDED DECEMBER 31, 1998 The supplemental schedules required to accompany the Plan's Form 5500 are not required since the Plan's assets are held in a Master Trust. Accordingly, the Plan administrator must file detailed financial information, including the supplemental schedules, separately with the Department of Labor.
2 Report of Independent Accountants To the Participants and Administrator of the Raytheon Tucson Bargaining Savings and Investment Plan: In our opinion, the accompanying statements of net assets available for plan benefits and the related statement of changes in net assets available for plan benefits present fairly, in all material respects, the net assets available for benefits of the Raytheon Tucson Bargaining Savings and Investment Plan (the "Plan") at December 31, 1998 and 1997, and the changes in net assets available for benefits for the year ended December 31, 1998 in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. As discussed in Notes A and H to the financial statements, the Board of Directors of Raytheon Company voted on December 16, 1998, to merge the Plan into the Raytheon Employee Savings and Investment Plan. PricewaterhouseCoopers LLP Boston, Massachusetts June 4, 1999
3 RAYTHEON TUCSON BARGAINING SAVINGS AND INVESTMENT PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS as of December 31, 1998 and 1997 1998 1997 Assets: Master trust investments: At contract value (Notes B, E and I) $ 6,852,411 $ 4,511 At fair value (Notes B, F and I) 39,004,660 84,493 ----------- ------- 45,857,071 89,004 Receivables: Accrued investment income and other receivables 47,028 240 Cash and cash equivalents 893,087 657 ----------- ------- Total assets 46,797,186 89,901 ----------- ------- Liabilities: Payable for outstanding purchases 5,252 260 Accrued expenses and other payables 8,858 76 Transfer payables (Note H) 46,783,076 ----------- ------- Total liabilities 46,797,186 336 ----------- ------- Net assets available for plan benefits $ - $89,565 =========== ======= The accompanying notes are an integral part of the financial statements.
4 RAYTHEON TUCSON BARGAINING SAVINGS AND INVESTMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS for the year ended December 31, 1998 Additions to net assets attributable to: Investment income (Notes B, E and I): Net appreciation of investments $ 2,228,840 Interest & Dividends 1,982,313 ----------- 4,211,153 Contributions and deferrals: Employee deferrals 3,570,498 Employer contributions 1,671,909 Transfers (Note G) 39,889,430 ----------- 45,131,837 Total additions 49,342,990 ----------- Deductions from net assets attributable to: Distributions to participants 2,644,901 Administrative expenses 4,578 Transfers (Note G and H) 46,783,076 ----------- Total deductions 49,432,555 ----------- Decrease in net assets (89,565) Net assets, beginning of year 89,565 ----------- Net assets, end of year $ - =========== The accompanying notes are an integral part of the financial statements.
5 RAYTHEON TUCSON BARGAINING SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS A. Description of Plan: General As more fully described in Note H, the Raytheon Tucson Bargaining Savings and Investment Plan (the "Plan") ceased to exist as of December 31, 1998 and effective January 1, 1999, the Plan was merged into the Raytheon Employee Savings and Investment Plan (RESIP). The following description of the Plan provides only general information that is applicable through December 31, 1998. Participants should refer to the plan document for a complete description of the Plan's provisions. The Plan was established on December 18, 1997. The Plan is a defined contribution plan covering certain employees of Raytheon Company (the "Company"). Effective December 18, 1997, General Motors Corporation employees assumed in connection with the merger of the defense business of Hughes Electronics Corporation with the Company (hereafter referred to as the "Hughes transaction"), that participated in the Hughes Tucson Bargaining Employees' Thrift and Savings Plan, became eligible to participate in the Plan. Participants had the option to rollover amounts accumulated in plans sponsored by General Motors Corporation to the Plan. The option to make a rollover election extended until December 1, 1998. To participate in the Plan, eligible employees must have three months of service and may enter the Plan only on the first day of each month. The purpose of the Plan is to provide participants with a tax-effective means of meeting both short and long-term investment objectives. The Plan is intended to be a "qualified cash or deferred arrangement" under the Internal Revenue Code (the "Code"). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan's investments are combined with the investments of other similar defined contribution plans of the Company into the Raytheon Company Master Trust for Defined Contribution Plans ("Master Trust"). The truste of the Master Trust maintains a separate account reflecting the equitable share in the Trust of each plan. Investment income and administrative expenses relating to the Master Trust are allocated to the individual plans based upon average monthly balances invested by each plan. Contributions and Deferrals Eligible employees are allowed to defer to the Plan up to 12% of their salaries. The Company contributes amounts equal to 100% of each participant's deferral, up to a maximum of 4% of the participant's salary. The contributions are invested in Raytheon Company common stock for two full plan years following the plan year for which the contributions are made, and are then allocated to participants' accounts. For 1998, the annual employee deferral for a participant cannot exceed $10,000. Rollover contributions from other qualified plans are accepted by the Plan. Participants may invest their deferrals in increments of 1% in any combination of seven funds: (a) a Fixed Income Fund under which assets are invested primarily in contracts providing for fixed rates of
6 interest for specified periods of time, (b) the Fidelity Equity Income Fund which invests in shares of a mutual fund consisting primarily of income-producing equity securities, (c) a Raytheon Common Stock Fund which invests in shares of Raytheon Company common stock, (d) a Stock Index Fund which invests in a commingled pool consisting primarily of equity securities and is designed to track the S&P 500 Index, (e) the Fidelity Balanced Fund which invests in shares of a mutual fund consisting of primarily equity securities, bonds and money market instruments, (f) the Fidelity Magellan Fund, a growth fund which invests primarily in equities of companies of all types and sizes, and (g) the Fidelity Blue Chip Fund, a growth fund which invests primarily in equities of well known and established companies. Amounts held in the RTN-A Wasting Fund and GMH Wasting Fund are shares of Raytheon Company Class A common stock or General Motors Class H common stock, respectively, that were transferred into the Plan as a result of the Hughes transaction. These options are not open for additional contributions and will only be available through December 31, 2002. Dividends and distributions from investments of the Fidelity Equity Income Fund, the Raytheon Common Stock Fund, the Stock Index Fund, the Fidelity Balanced Fund, the Fidelity Magellan Fund, the Fidelity Blue Chip Fund, the RTN-A Wasting Fund and the GHM Wasting Fund are reinvested in their respective funds; stock dividends, stock splits and similar changes are also reflected in the funds. Participant Accounts Each participant's account is credited with the participant's deferral, the Company's contribution and an allocation of plan earnings. Plan earnings are allocated based on account balances by fund. Vesting Participants are immediately vested in their voluntary deferrals plus actual earnings thereon. Vesting requirements for employer contributions plus earnings thereon may vary depending upon when an employee became eligible to participate in the Plan. Vesting generally occurs upon completion of five years of service or upon three years of participation or upon retirement, death, disability, or attainment of normal retirement age. Forfeitures of the nonvested portions of terminated participants' accounts are used to reduce required contributions of the Company. Distributions to Participants A participant may withdraw all or a portion of deferrals, employer contributions and related earnings upon attainment of age 59 1/2. For reasons of financial hardship, as defined in the Plan document, a participant may withdraw all or a portion of deferrals. On termination of employment, a participant will receive a lump-sum distribution unless the vested account is valued in excess of $3,500 and the participant elects to defer distribution. A retiree or a beneficiary of a deceased participant may defer the distribution until January of the year following attainment of age 65.
7 Loans to Participants A participant may borrow against a portion of the balance in the participant's account, subject to certain restrictions. The maximum amount of a loan is the lesser of one-half of the participant's vested account balance or $50,000. The minimum loan which may be granted is $500. The interest rate applied is equal to the prime rate published in the Wall Street Journal on the first business day in June and December of each year. Loans must be repaid over a period of up to 5 years by means of payroll deductions. In certain cases, the repayment period may be extended up to 15 years. Interest paid to the Plan on loans to participants is credited to the borrower's account in the investment fund to which repayments are made. Administrative Expenses Substantially all expenses of administering the Plan are paid by the plan participants. B. Summary of Significant Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting. The Plan's investment contracts are fully benefit-responsive and are therefore included in the financial statements at their contract value, defined as net contributions and deferrals plus interest earned on the underlying investments at contracted rates. Contract value approximates fair value. Investments in mutual funds and the commingled pool are valued at the closing net asset value reported on the last business day of the year. Investments in securities (common stocks) traded on a national securities exchange are valued at the last reported sales price on the last business day of the year. Cash equivalents are short-term money market instruments and are valued at cost, which approximates fair value. Participant loans are valued at cost, which approximates fair value. Security transactions are recorded on the trade date. Except for its investment contracts (Note E), the Plan's investments are held by bank-administered trust funds. Payables for outstanding security transactions represent trades which have occurred but have not yet settled. The Plan presents in the statement of changes in net assets the net appreciation (depreciation) in the fair value of its investments which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. Dividend income is recorded on the ex-dividend date. Income from other investments is recorded as earned on an accrual basis. Investment income includes both dividend and interest income.
8 Benefits are recorded when paid. The preparation of the financial statements in conformity with generally accepted accounting principles requires the Plan administrator to make significant estimates and assumptions that affect the reported amounts of net assets and liabilities available for benefits at the date of the financial statements and the change in net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from the estimates included in the financial statements. The Plan provides for various investment options in any combination of stocks, bonds, fixed income securities, mutual funds and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the statement of net assets available for plan benefits and the statement of changes in net assets available for plan benefits. C. Federal Income Tax Status: The Internal Revenue Service has determined and informed the Company by letter dated February 1999 that the Plan, as adopted on December 17, 1997, and related Trust are designed in accordance with applicable sections of the Code. The Plan has been amended since applying for the determination letter. However, the Plan administrator and the Plan's legal counsel believe that the Plan is currently designed and being operated in compliance with applicable requirements of the Code. Therefore, no provision for income taxes has been included in the Plan's financial statements. D. Plan Termination: Although it has not expressed any intention to do so, the Company reserves the right under the Plan at any time or times to discontinue its contributions and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, amounts in participants' accounts will be distributed in a single lump sum; if the participant does not consent to an immediate distribution, the amount can be transferred to another defined contribution plan sponsored by the Company. E. Investment Contracts: The Plan invests in collateralized fixed income investment portfolios which are managed by insurance companies and investment management firms. The credited interest rates are adjusted semiannually to reflect the experienced and anticipated yields to be earned on such investments, based on their book value. The annualized average yield and credited interest rates were as follows:
9 Annualized Credited Average Yield Interest Rate For the year ended December 31, 1998: Banker's Trust (WBS 92-485) 6.85% 6.85% Metropolitan Life Insurance Company (GIC GA-12908) 6.58% 6.58% Metropolitan Life Insurance Company (GIC GA-13659) 6.10% 6.10% Prudential Asset Management Company (GIC 917163-001) 6.75% 6.75% Connecticut General (GIC 0025174) 5.58% 5.58% Fidelity IPL (633-GCDC) 5.62% 5.62% Monumental Life Insurance Company (GIC BDA00463FR-00) 7.84% 7.84% For the year ended December 31, 1997: Banker's Trust (WBS 92-485) 6.95% 6.95% Metropolitan Life Insurance Company (GIC GA-12908) 6.86% 6.86% Metropolitan Life Insurance Company (GIC GA-13659) 6.43% 6.43% Prudential Asset Management Company (GIC 917163-001) 6.99% 6.99% The contract values are subject to limitations in certain situations including large workforce reductions and plan termination. In the financial statements the two Metropolitan Life Insurance Company contracts are recorded as one investment option. F. Related Party Transactions: The Plan's trustee is Fidelity Management Trust Company (the "Trustee"). The Trustee holds the funds for the Plan and is responsible for managing the Plan's investment assets, executing all investment transactions, recording approved transactions, and, therefore these transactions qualify as party-in-interest. In accordance with the provisions of the Plan, the Trustee acts as the Plan's agent for purchases and sales of shares of Raytheon Company common stock. These transactions are performed on a Master Trust Level. For the Master Trust, purchases amounted to $288,116,995 and sales amounted to $257,878,566 for the year ended December 31, 1998. G. Transfers: Transfers include transfers of participant accounts, individually and/or in groups, between the Plan and other plans included in the Raytheon Company Master Trust for those participants, and/or groups of participants, who changed plans during the year. Transfers also include transfers of participant accounts, individually and/or in groups, between the Plan and similar savings plans of other companies for those participants who changed companies during the year. During the year, amounts rolled over by former employees of General Motors Corporation who participated in the Hughes Tucson Bargaining Employees' Thrift and Savings Plan and who became eligible to participate in the Plan totaled $33,217,821.
10 H. Transfer Payables: As part of an overall effort to minimize plan design differences and increase administrative efficiencies, the Board of Directors of Raytheon Company voted on December 16, 1998 to merge the participants and their account balances into the RESIP. The Plan ceased to exist on December 31, 1998 and effective January 1, 1999, the plan provisions of the RESIP govern. The transfer payable amount represents a complete transfer of assets to the RESIP.
11 I. Fund Data: The following is a summary of net assets available for plan benefits by fund as of December 31, 1998: Participant Directed Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Blue Chip Fund Fund Stock Fund Fund Fund Fund Fund Assets: Master trust investments: At contract value: Bankers Trust $2,412,371 Prudential Insurance Company of America 1,208,018 Metropolitan Life Insurance Company 3,032,149 Fidelity 131,529 Connecticut General 33,329 Monumental Life Insurance Company 35,015 At fair value: Fidelity Equity Income Fund $15,405,128 Raytheon Company Common Stock Fund $680,552 BT Pyramid Equity Index Fund $982,271 Fidelity Balanced Fund $3,878,790 Fidelity Magellan Fund $3,145,397 Fidelity Blue Chip Fund $2,357,467 Wasting Stock Fund Raytheon GMH Wasting Stock Fund Loans receivable from participants ---------- ----------- -------- -------- ---------- ---------- ---------- Total investments 6,852,411 15,405,128 680,552 982,271 3,878,790 3,145,397 2,357,467 ---------- ----------- -------- -------- ---------- ---------- ---------- Receivables: Accrued investment income and other receivables 4,042 2,074 Cash and cash equivalents 631,915 9,366 4,387 ---------- ----------- -------- -------- ---------- ---------- ---------- Total assets 7,484,326 15,405,128 693,960 988,732 3,878,790 3,145,397 2,357,467 ---------- ----------- -------- -------- ---------- ---------- ---------- Liabilities: Payable for outstanding purchases 1,644 Accrued expenses and other payables 1,578 1,113 Transfer payables 7,484,326 15,405,128 690,738 987,619 3,878,790 3,145,397 2,357,467 ---------- ----------- -------- -------- ---------- ---------- ---------- Total liabilities 7,484,326 15,405,128 693,960 988,732 3,878,790 3,145,397 2,357,467 ---------- ---------- -------- -------- ---------- ---------- ---------- Net assets available for plan benefits $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 ========== =========== ======== ======== ========== ========== ==========
12 Participant Directed Non-Participant Directed RTN.A GMH Raytheon Wasting Wasting Loan Common Fund Fund Fund Stock Fund Total Assets: Master trust investments: At contract value: Bankers Trust $ 2,412,371 Prudential Insurance Company of America 1,208,018 Metropolitan Life Insurance Company 3,032,149 Fidelity 131,529 Connecticut General 33,329 Monumental Life Insurance Company 35,015 At fair value: Fidelity Equity Income Fund 15,405,128 Raytheon Company Common Stock Fund $1,492,857 2,173,409 BT Pyramid Equity Index Fund 982,271 Fidelity Balanced Fund 3,878,790 Fidelity Magellan Fund 3,145,397 Fidelity Blue Chip Fund 2,357,467 Raytheon Class A Wasting Stock Fund $3,061,517 3,061,517 Raytheon GMH Wasting Stock Fund $4,266,631 4,266,631 Loans receivable from participants $3,734,050 3,734,050 ---------- ---------- ---------- ---------- ----------- Total investments 3,061,517 4,266,631 3,734,050 1,492,857 45,857,071 ---------- ---------- ---------- ---------- ----------- Receivables: Accrued investment income and other receivables 31,461 584 8,867 47,028 Cash and cash equivalents 91,756 135,118 20,545 893,087 ---------- ---------- ---------- ---------- ----------- Total assets 3,184,734 4,402,333 3,734,050 1,522,269 46,797,186 ---------- ---------- ---------- ---------- ----------- Liabilities: Payable for outstanding purchases 3,608 5,252 Accrued expenses and other payables 1,100 1,606 3,461 8,858 Transfer payables 3,183,634 4,400,727 3,734,050 1,515,200 46,783,076 ---------- ---------- ---------- ---------- ----------- Total liabilities 3,184,734 4,402,333 3,734,050 1,522,269 46,797,186 ---------- ---------- ---------- ---------- ----------- Net assets available for plan benefits $ 0 $ 0 $ 0 $ 0 $ 0 ========== ========== ========== ========== ===========
13 I. Fund Data, Continued: The following is a summary of net assets available for plan benefits by fund as of December 31, 1997: Participant Directed 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 $1,685 Prudential Insurance Company of America 1,045 Metropolitan Life Insurance Company 1,781 At fair value: Fidelity Equity Income Fund* $18,557 Raytheon Company Common Stock* $3,075 BT Pyramid Equity Index Fund* $6,028 Fidelity Balanced Fund* $5,772 Fidelity Magellan Fund* $15,517 Fidelity Blue Chip Fund* ------ -------- ------ ------ ------ ------- Total investments 4,511 18,557 3,075 6,028 5,772 15,517 ------ -------- ------ ------ ------ ------- Receivables: Accrued investment income and other receivables 23 14 Cash and cash equivalents 45 56 59 ------ ------- ------ ------ ------ ------- Total assets 4,556 18,557 3,154 6,101 5,772 15,517 ------ ------- ------ ------ ------ ------- Liabilities: Payable for outstanding purchases 26 Accrued expenses and other payables 6 15 ------ ------- ------ ------ ------ ------ Total liabilities - - 32 15 - - ------ ------- ------ ------ ------ ------ Net assets available for plan benefits $4,556 $18,557 $3,122 $6,086 $5,772 $15,517 ====== ======= ====== ====== ====== ======= *Represents more than 5% of net assets available for plan benefits
14 Participant Non-Participant Directed Directed Raytheon Blue Chip Common Stock Fund Fund Total Assets: Master trust investments: At contract value: Bankers Trust $ 1,685 Prudential Insurance Company of America 1,045 Metropolitan Life Insurance Company 1,781 At fair value: Fidelity Equity Income Fund* 18,557 Raytheon Company Common Stock* $27,479 30,554 BT Pyramid Equity Index Fund* 6,028 Fidelity Balanced Fund* 5,772 Fidelity Magellan Fund* 15,517 Fidelity Blue Chip Fund* $8,065 8,065 ------ ------- ------- Total investments 8,065 27,479 89,004 ------ ------- ------- Receivables: Accrued investment income and other receivables 203 240 Cash and cash equivalents 497 657 ------ ------- ------- Total assets 8,065 28,179 89,901 ------ ------- ------- Liabilities: Payable for outstanding purchases 234 260 Accrued expenses and other payables 55 76 ------ ------ ------- Total liabilities - 289 336 ------ ------ ------- Net assets available for plan benefits $8,065 $27,890 $89,565 ====== ======= ======= *Represents more than 5% of net assets available for plan benefits
15 I. Fund Data, Continued: The following is a summary of changes in net assets available for plan benefits by fund for the year ended December 31, 1998: Participant Directed Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Blue Chip Fund Fund Stock Fund Fund Fund Fund Fund Additions to net assets attributable to: Investment income: Net appreciation (depreciation) of investments $ 257 $ 145,741 $ 5,850 $115,620 $ 139,829 $ 343,355 $ 296,967 Interest & Dividends 367,313 883,995 365,461 100,830 73,114 ---------- ---------- -------- -------- ---------- ---------- ---------- 367,570 1,029,736 5,850 115,620 505,290 444,185 370,081 ---------- ---------- -------- -------- ---------- ---------- ---------- Contributions and deferrals: Employee deferrals 269,806 1,051,367 201,749 341,115 333,549 888,030 484,882 Employer contributions Transfers 7,586,320 16,505,038 137,663 198,871 3,677,882 570,655 419,592 ---------- ---------- -------- -------- ---------- ---------- ---------- 7,856,126 17,556,405 339,412 539,986 4,011,431 1,458,685 904,474 ---------- ---------- -------- -------- ---------- ---------- ---------- Total additions 8,223,696 18,586,141 345,262 655,606 4,516,721 1,902,870 1,274,555 ---------- ---------- -------- -------- ---------- ---------- ---------- Deductions from net assets attributable to: Distributions to participants 840,798 776,023 59,154 22,858 164,311 82,397 80,145 Administrative expenses 913 1,591 26 50 354 142 80 Transfers Transfers plan mergers 7,484,326 15,405,128 690,738 987,619 3,878,790 3,145,397 2,357,467 ---------- ---------- -------- ---------- ---------- ---------- ---------- Total deductions 8,326,037 16,182,742 749,918 1,010,527 4,043,455 3,227,936 2,437,692 ---------- ---------- -------- ---------- ---------- ---------- ---------- Interfund transfers 97,785 (2,421,956) 401,534 348,835 (479,038) 1,309,549 1,155,072 ---------- ---------- -------- ---------- ---------- ---------- ---------- Decrease in net assets (4,556) (18,557) (3,122) (6,086) (5,772) (15,517) (8,065) Net assets, beginning of year 4,556 18,557 3,122 6,086 5,772 15,517 8,065 ---------- ---------- -------- ---------- ---------- ---------- ---------- Net assets, end of year $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 ========== ========== ======== ========== ========== ========== ==========
16 Participant Directed Non-Participant Directed RTN.A GMH Raytheon Wasting Wasting Loan Common Fund Fund Fund Stock Fund Total Additions to net assets attributable to: Investment income: Net appreciation (depreciation) of investments $ (7,016) $ 1,199,091 $ (10,854) $ 2,228,840 Interest & Dividends $ 191,600 1,982,313 ---------- ----------- ---------- ---------- ----------- (7,016) 1,199,091 191,600 (10,854) 4,211,153 ---------- ----------- ---------- ---------- ----------- Contributions and deferrals: Employee deferrals 3,570,498 Employer contributions 1,671,909 1,671,909 Transfers 3,893,484 4,474,025 2,424,586 1,314 39,889,430 ---------- ---------- ---------- ---------- ----------- 3,893,484 4,474,025 2,424,586 1,673,223 45,131,837 ---------- ---------- ---------- ---------- ----------- Total additions 3,886,468 5,673,116 2,616,186 1,662,369 49,342,990 ---------- ---------- ---------- ---------- ----------- Deductions from net assets attributable to: Distributions to participants 223,871 319,876 41,519 33,949 2,644,901 Administrative expenses 531 855 36 4,578 Transfers - Transfers plan mergers 3,183,634 4,400,727 3,734,050 1,515,200 46,783,076 ---------- ---------- ---------- ---------- ----------- Total deductions 3,408,036 4,721,458 3,775,569 1,549,185 49,432,555 ---------- ---------- ---------- ---------- ----------- Interfund transfers (478,432) (951,658) 1,159,383 (141,074) - ---------- ---------- ---------- ---------- ----------- Decrease in net assets - - - (27,890) (89,565) Net assets, beginning of year - - - 27,890 89,565 ---------- ---------- ---------- ---------- ----------- Net assets, end of year $ 0 $ 0 $ 0 $ 0 $ 0 ========== ========== ========== ========== ===========
17 J. Master Trust: All plan investments are included under the Master Trust. At December 31, 1998, assets of the Plan represented 0% of the total assets under the Master Trust. This has decreased from .003% at December 31, 1997. The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1998: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $ 473,258,791 Prudential Life Insurance Company of America 236,989,116 Metropolitan Life Insurance Company* 594,847,154 Fidelity 25,803,449 Connecticut General 6,538,482 Monumental Life Insurance Company 6,869,338 At fair value: Fidelity Equity Income Fund* $1,464,615,296 Raytheon Company Common Stock Fund* $ 799,542,751 BT Pyramid Equity Index Fund* $ 745,602,791 Fidelity Balanced Fund* $ 442,796,289 Fidelity Magellan Fund* $ 379,680,454 Fidelity Blue Chip Fund* Templeton Foreign I Fund Fidelity Investment Grade Bond Fund Fidelity Retirement Money Market Vanguard Winsor Vanguard Wellesley TRP Small Cap Stock Raytheon Class A Wasting Stock Fund Raytheon GMH Wasting Stock Fund Loans receivable from participants -------------- -------------- -------------- -------------- -------------- -------------- Total investments 1,344,306,330 1,464,615,296 799,542,751 745,602,791 442,796,289 379,680,454 -------------- -------------- -------------- -------------- -------------- -------------- Receivables: Employer contribution Accrued investment income and other receivables 4,748,948 1,573,604 Transfer receivables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803 Cash and cash equivalents 123,969,201 11,004,025 3,330,147 -------------- -------------- -------------- -------------- -------------- -------------- Total assets 2,048,537,201 2,226,757,712 1,255,380,751 967,248,229 755,173,618 616,369,257 -------------- -------------- -------------- -------------- -------------- -------------- Liabilities: Payables for outstanding purchases 1,932,125 Accrued expenses and other payables 1,853,618 844,977 Transfer payables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803 -------------- -------------- -------------- -------------- -------------- -------------- Total liabilities 580,261,670 762,142,416 443,870,770 217,586,664 312,377,329 236,688,803 -------------- -------------- -------------- -------------- -------------- -------------- Net assets available for plan benefits $1,468,275,531 $1,464,615,296 $ 811,509,981 $ 749,661,565 $ 442,796,289 $ 379,680,454 ============== ============== ============== ============== ============== ==============
18 Templeton Investment Retirement Vanguard Vanguard Blue Chip Foreign I Grade Money Winsor Wellesley Fund Fund Bond Fund Market Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* Prudential Life Insurance Company of America Metropolitan Life Insurance Company* Fidelity Connecticut General Monumental Life Insurance Company At fair value: Fidelity Equity Income Fund* Raytheon Company Common Stock Fund* BT Pyramid Equity Index Fund* Fidelity Balanced Fund* Fidelity Magellan Fund* Fidelity Blue Chip Fund* $ 391,787,509 Templeton Foreign I Fund $ 6,966,704 Fidelity Investment Grade Bond Fund $ - Fidelity Retirement Money Market $ 13,202,524 Vanguard Winsor $ 41 Vanguard Wellesley $ 18 TRP Small Cap Stock Raytheon Class A Wasting Stock Fund Raytheon GMH Wasting Stock Fund Loans receivable from participants -------------- -------------- -------------- ------------- ------------- -------------- Total investments 391,787,509 6,966,704 - 13,202,524 41 18 -------------- -------------- -------------- ------------- ------------- -------------- Receivables: Employer contribution 3,595,261 Accrued investment income and other receivables Transfer receivables 191,269,141 6,966,652 16,715,590 Cash and cash equivalents -------------- -------------- -------------- ------------- ------------- -------------- Total assets 583,056,650 13,933,356 - 33,513,375 41 18 -------------- -------------- -------------- ------------- ------------- -------------- Liabilities: Payable for outstanding purchases Accrued expenses and other payables Transfer payables 191,269,141 6,966,652 16,715,590 -------------- -------------- -------------- ------------- ------------- -------------- Total liabilities 191,269,141 6,966,652 - 16,715,590 - - -------------- -------------- -------------- ------------- ------------- -------------- Net assets available for plan benefits $ 391,787,509 6,966,704 $ - $ 16,797,785 $ 41 $ 18 ============== ============== ============== ============== ============== ==============
19 TRP Small RTN.A GMH Cap Stock Wasting Wasting Loan Fund Fund Fund Fund Other(1) Total Assets: Investments: At contract value: Bankers Trust* $ 473,258,791 Prudential Life Insurance Company of America 236,989,116 Metropolitan Life Insurance Company* 594,847,154 Fidelity 25,803,449 Connecticut General 6,538,482 Monumental Life Insurance Company 6,869,338 At fair value: Fidelity Equity Income Fund* 1,464,615,296 Raytheon Company Common Stock Fund* 799,542,751 BT Pyramid Equity Index Fund* 745,602,791 Fidelity Balanced Fund* 442,796,289 Fidelity Magellan Fund* 379,680,454 Fidelity Blue Chip Fund* 391,787,509 Templeton Foreign I Fund 6,966,704 Fidelity Investment Grade Bond Fund - Fidelity Retirement Money Market 13,202,524 Vanguard Winsor 41 Vanguard Wellesley 18 TRP Small Cap Stock $ 348 348 Raytheon Class A Wasting Stock Fund $ 116,129,149 116,129,149 Raytheon GMH Wasting Stock Fund $ 172,859,819 172,859,819 Loans receivable from participants $ 250,687,865 250,687,865 -------------- -------------- -------------- -------------- ------------- -------------- Total investments 348 116,129,149 172,859,819 250,687,865 - 6,128,177,888 -------------- -------------- -------------- -------------- ------------- -------------- Receivables: Employer contribution 3,595,261 Accrued investment income and other receivables 1,193,397 23,640 7,539,589 Transfer receivables 120,761,325 178,295,618 117,046,618 $ 855,826,675 4,035,178,551 Cash and cash equivalents 3,480,490 5,474,220 147,258,083 -------------- -------------- -------------- ------------- -------------- -------------- Total assets 348 241,564,361 356,653,297 367,734,483 855,826,675 10,321,749,372 -------------- -------------- -------------- ------------- -------------- -------------- Liabilities: Payable for outstanding purchases 1,932,125 Accrued expenses and other payables 41,711 62,061 2,802,367 Transfer payables 120,761,325 178,295,618 117,046,618 3,179,351,876 -------------- -------------- -------------- ------------- -------------- -------------- Total liabilities - 120,803,036 178,357,679 117,046,618 - 3,184,086,368 -------------- -------------- -------------- ------------- -------------- -------------- Net assets available for plan benefits $ 348 $120,761,325 $ 178,295,618 $ 250,687,865 $ 855,826,675 $7,137,663,004 ============== ============== ============== ============== =============== ============== Percentage of Master Trust that are Plan assets - 0.00% *Represent more than 5% of net assets available for plan benefits (1) Other represents Raytheon plans merging in from outside the Master Trust. Note: Not all funds within the Master Trust are available options to participants in the Plan.
20 J. Master Trust, Continued: The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1997: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $351,035,073 Prudential Life Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* $782,799,011 Raytheon Company Common Stock Fund* $745,980,294 BT Pyramid Equity Index Fund* $484,781,406 Fidelity Balanced Fund $117,556,481 Fidelity Magellan Fund $91,863,155 Fidelity Blue Chip Fund Templeton Foreign I Fund Fidelity Investment Grade Bond Fund Fidelity Retirement Money Market Fund Loans receivable from participants ------------ ------------ ------------ ------------ ------------ ----------- Total investments 939,889,852 782,799,011 745,980,294 484,781,406 117,556,481 91,863,155 ------------ ------------ ------------ ------------ ------------ ----------- Receivables: Employer contribution Accrued investment income and other receivables 5,489,592 1,161,112 Cash and cash equivalents 9,232,100 13,498,051 4,761,268 ------------ ------------ ------------ ------------ ------------ ----------- Total assets 949,121,952 782,799,011 764,967,937 490,703,786 117,556,481 91,863,155 ------------ ------------ ------------ ------------ ------------ ----------- Liabilities: Payable for outstanding purchases 6,340,318 Accrued expenses and other payables 1,480,875 1,200,471 ------------- ------------ ------------ ------------ ------------ ----------- Total liabilities - - 7,821,193 1,200,471 - - ------------- ------------ ------------ ------------ ------------ ----------- Net assets available for plan benefits $949,121,952 $782,799,011 $757,146,744 $489,503,315 $117,556,481 $91,863,155 ============ ============ ============ ============ ============ ===========
21 Templeton Investment Retirement Blue Chip Foreign I Grade Money Loan Fund Fund Bond Fund Market Fund Fund Total Assets: Investments: At contract value: Bankers Trust* $351,035,073 Prudential Life Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* 782,799,011 Raytheon Company Common Stock Fund* 745,980,294 BT Pyramid Equity Index Fund* 484,781,406 Fidelity Balanced Fund 117,556,481 Fidelity Magellan Fund 91,863,155 Fidelity Blue Chip Fund $136,586,123 136,586,123 Templeton Foreign I Fund $5,471,176 5,471,176 Fidelity Investment Grade Bond Fund $1,548,125 1,548,125 Fidelity Retirement Money Market Fund $12,186,085 12,186,085 Loans receivable from participants $166,395,767 166,395,767 ------------ ---------- ---------- ----------- ------------ ------------- Total investments 136,586,123 5,471,176 1,548,125 12,186,085 166,395,767 3,485,057,475 ------------ ---------- ---------- ----------- ------------ -------------- Receivables: Employer contribution 4,015,100 4,015,100 Accrued investment income and other receivables 6,650,704 Cash and cash equivalents 27,491,419 ------------ ---------- ---------- ----------- ------------ -------------- Total assets 136,586,123 5,471,176 1,548,125 16,201,185 166,395,767 3,523,214,698 Liabilities: Payable for outstanding purchases 6,340,318 Accrued expenses and other payables 2,681,346 ------------ ---------- ---------- ----------- ------------ -------------- Total liabilities - - - - - 9,021,664 ------------ ---------- ---------- ----------- ------------ -------------- Net assets available for plan benefits $136,586,123 $5,471,176 $1,548,125 $16,201,185 $166,395,767 $3,514,193,034 ============ ========== ========== =========== ============ ============== Percentage of Master Trust that are plan assets - 0.003% *Represent more than 5% of net assets available for plan benefits Note: Not all funds within the Master Trust are available options to participants in the Plan.
22 J. Master Trust, Continued: The following is a summary of investment income by fund under the Master Trust for the year ended December 31, 1998: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Investment income: Net appreciation (depreciation) of assets $ 30,695 $ 49,019,748 $74,202,083 $149,571,006 $16,091,158 $62,195,801 Interest & Dividends 81,886,632 86,279,682 1,792 42,537,357 13,255,763 ----------- ------------ ----------- ------------ ----------- ----------- Total investment income/(loss) $81,917,327 $135,299,430 $74,203,875 $149,571,006 $58,628,515 $75,451,564 =========== ============ =========== ============ =========== ===========
23 Templeton Investment Retirement Vanguard Vanguard Blue Chip Foreign I Grade Money Winsor Wellesley Fund Fund Bond Fund Market Fund Fund Fund Investment income: Net appreciation (depreciation) of assets $60,264,181 $(1,095,980) $ 17,635 $2,864,378 $1,379,950 Interest & Dividends 13,550,491 752,610 162,858 $ 349,740 ----------- ----------- -------- ---------- ---------- ---------- Total investment income/(loss) $73,814,672 $ (343,370) $180,493 $ 349,740 $2,864,378 $1,379,950 =========== =========== ======== ========== ========== ==========
24 TRP Small RTN.A GMH Cap Stock Wasting Wasting Loan Fund Fund Fund Fund Total Investment income: Net appreciation (depreciation) of assets $ 15 $ (35,268) $44,604,025 $459,109,427 Interest & Dividends $15,334,403 254,111,328 ----------- ---------- ----------- ----------- ------------ Total investment income/(loss) $ 15 $ (35,268) $44,604,025 $15,334,403 $713,220,755 =========== ========== =========== =========== ============
1 EXHIBIT 99.9a CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (File No. 333-56117) of Raytheon Company of our report dated June 4, 1999 relating to the financial statements of the Raytheon Tucson Bargaining Savings and Investment Plan, which appears in this Form 10-K/A. PricewaterhouseCoopers LLP Boston, Massachusetts June 29, 1999
1 EXHIBIT 99.10 RAYTHEON SAVINGS AND INVESTMENT PLAN (10014) FINANCIAL STATEMENTS TO ACCOMPANY 1998 FORM 5500 ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN UNDER ERISA OF 1974 FOR THE YEAR ENDED DECEMBER 31, 1998 The supplemental schedules required to accompany the Plan's Form 5500 are not required since the Plan's assets are held in a Master Trust. Accordingly, the Plan administrator must file detailed financial information, including the supplemental schedules, separately with the Department of Labor.
2 Report of Independent Accountants To the Participants and Administrator of the Raytheon Savings and Investment Plan (10014): In our opinion, the accompanying statements of net assets available for plan benefits and the related statement of changes in net assets available for plan benefits present fairly, in all material respects, the net assets available for benefits of the Raytheon Savings and Investment Plan (10014)(the "Plan") at December 31, 1998 and 1997, and the changes in net assets available for benefits for the year ended December 31, 1998 in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. As discussed in Notes A and H to the financial statements, the Board of Directors of Raytheon Company voted on December 16, 1998, to merge the Plan into the Raytheon Employee Savings and Investment Plan. PricewaterhouseCoopers LLP Boston, Massachusetts June 4, 1999
3 RAYTHEON SAVINGS AND INVESTMENT PLAN (10014) STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS as of December 31, 1998 and 1997 1998 1997 Assets: Master trust investments: At contract value (Notes B, E and I) $ 2,215,995 $ 2,280 At fair value (Notes B, F and I) 16,122,546 59,325 ----------- ------- 18,338,541 61,605 Receivables: Accrued investment income and other receivables 22,764 155 Cash and cash equivalents 323,185 426 ----------- ------- Total assets 18,684,490 62,186 ----------- ------- Liabilities: Payable for outstanding purchases 2,857 165 Accrued expenses and other payables 4,636 51 Transfer payables (Note H) 18,676,997 ----------- ------- Total liabilities 18,684,490 216 ----------- ------- Net assets available for plan benefits $ - $61,970 =========== ======= The accompanying notes are an integral part of the financial statements.
4 RAYTHEON SAVINGS AND INVESTMENT PLAN (10014) STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS for the year ended December 31, 1998 Additions to net assets attributable to: Investment income (Notes B, E and I): Net appreciation of investments $ 1,071,553 Interest & Dividends 757,891 ----------- 1,829,444 Contributions and deferrals: Employee deferrals 2,527,892 Employer contributions 922,490 Transfers (Note G) 14,208,728 ---------- 17,659,110 Total additions 19,488,554 ----------- Deductions from net assets attributable to: Distributions to participants 849,450 Administrative expenses 2,995 Transfers (Note G and H) 18,698,079 ----------- Total deductions 19,550,524 ----------- Decrease in net assets (61,970) Net assets, beginning of year 61,970 ----------- Net assets, end of year $ - =========== The accompanying notes are an integral part of the financial statements.
5 RAYTHEON SAVINGS AND INVESTMENT PLAN (10014) NOTES TO FINANCIAL STATEMENTS A. Description of Plan: General As more fully described in Note H, the Raytheon Savings and Investment Plan (10014) (the "Plan") ceased to exist as of December 31, 1998 and effective January 1, 1999 the Plan was merged into the Raytheon Employee Savings and Investment Plan (RESIP). The following description of the Plan provides only general information that is applicable through December 31, 1998. Participants should refer to the plan document for a complete description of the Plan's provisions. The Plan, which was established on December 18, 1997, is a defined contribution plan covering certain employees of Raytheon Company (the "Company"). Effective December 18, 1997, employees assumed in connection with the merger of the defense business of Hughes Electronics Corporation with the Company (hereafter referred to as the "Hughes transaction") that participated in the Hughes Thrift and Savings Plan became eligible to participate in the Plan. Participants had the option to rollover amounts accumulated in plans sponsored by the defense business of Hughes Electronics Corporation to the Plan. The option to make a rollover election extended until December 1, 1998. To participate in the Plan, eligible employees must have three months of service and may enter the Plan only on the first day of each month. The purpose of the Plan is to provide participants with a tax-effective means of meeting both short and long-term investment objectives. The Plan is intended to be a "qualified cash or deferred arrangement" under the Internal Revenue Code (the "Code"). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan's investments are combined with the investments of other similar defined contribution plans of the Company into the Raytheon Company Master Trust for Defined Contribution Plans ("Master Trust"). The trustee of the Master Trust maintains a separate account reflecting the equitable share in the Trust of each plan. Investment income and administrative expenses relating to the Master Trust are allocated to the individual plans based upon average monthly balances invested by each plan.
6 Contributions and Deferrals Eligible employees are allowed to defer to the Plan up to 10% of their salaries. The Company contributes amounts equal to 50% of each participant's deferral, up to a maximum of 3% of the participant's salary. The contributions are invested in Raytheon Company common stock for two full plan years following the plan year for which the contributions are made, and are then allocated to participants' accounts. For 1998, the annual employee deferral for a participant cannot exceed $10,000. Rollover contributions from other qualified plans are accepted by the Plan. Participants may invest their deferrals in increments of 1% in any combination of seven funds: (a) a Fixed Income Fund under which assets are invested primarily in contracts providing for fixed rates of interest for specified periods of time, (b) the Fidelity Equity Income Fund which invests in shares of a mutual fund consisting primarily of income-producing equity securities, (c) a Raytheon Common Stock Fund which invests in shares of Raytheon Company common stock, (d) a Stock Index Fund which invests in a commingled pool consisting primarily of equity securities and is designed to track the S&P 500 Index, (e) the Fidelity Balanced Fund which invests in shares of a mutual fund consisting of primarily equity securities, bonds and money market instruments, (f) the Fidelity Magellan Fund, a growth fund which invests primarily in equities of companies of all types and sizes, and (g) the Fidelity Blue Chip Fund, a growth fund which invests primarily in equities of well known and established companies. Amounts held in the RTN-A Wasting Fund and GMH Wasting Fund are shares of Raytheon Company Class A common stock or General Motors Class H common stock, respectively, that were transferred into the Plan as a result of the Hughes transaction. These options are not open for additional contributions and will only be available through December 31, 2002. Dividends and distributions from investments of the Fidelity Equity Income Fund, the Raytheon Common Stock Fund, the Stock Index Fund, the Fidelity Balanced Fund, the Fidelity Magellan Fund, the Fidelity Blue Chip Fund, the RTN-A Wasting Fund and the GHM Wasting Fund are reinvested in their respective funds; stock dividends, stock splits and similar changes are also reflected in the funds. Participant Accounts Each participant's account is credited with the participant's deferral, the Company's contribution and an allocation of Plan earnings. Plan earnings are allocated based on account balances by fund. Vesting Participants are immediately vested in their voluntary deferrals plus actual earnings thereon. Vesting requirements for employer contributions plus earnings thereon may vary depending upon when an employee became eligible to participate in the Plan. Vesting generally occurs upon completion of five years of service or upon three years of Plan participation or upon retirement, death, disability, or attainment of normal retirement age. Forfeitures of the nonvested portions of terminated participants' accounts are used to reduce required contributions of the Company.
7 Distributions to Participants A participant may withdraw all or a portion of deferrals, employer contributions and related earnings upon attainment of age 59 1/2. For reasons of financial hardship, as defined in the Plan document, a participant may withdraw all or a portion of deferrals. On termination of employment, a participant will receive a lump-sum distribution unless the vested account is valued in excess of $3,500 and the participant elects to defer distribution. A retiree or a beneficiary of a deceased participant may defer the distribution until January of the year following attainment of age 65. Loans to Participants A participant may borrow against a portion of the balance in the participant's account, subject to certain restrictions. The maximum amount of a loan is the lesser of one-half of the participant's vested account balance or $50,000. The minimum loan which may be granted is $500. The interest rate applied is equal to the prime rate published in the Wall Street Journal on the first business day in June and December of each year. Loans must be repaid over a period of up to 5 years by means of payroll deductions. In certain cases, the repayment period may be extended up to 15 years. Interest paid to the Plan on loans to participants is credited to the borrower's account in the investment fund to which repayments are made. Administrative Expenses Substantially all expenses of administering the Plan are paid by the plan participants. B. Summary of Significant Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting. The Plan's investment contracts are fully benefit-responsive and are therefore included in the financial statements at their contract value, defined as net contributions and deferrals plus interest earned on the underlying investments at contracted rates. Contract value approximates fair value. Investments in mutual funds and the commingled pool are valued at the closing net asset value reported on the last business day of the year. Investments in securities (common stocks) traded on a national securities exchange are valued at the last reported sales price on the last business day of the year. Cash equivalents are short-term money market instruments and are valued at cost, which approximates fair value. Participant loans are valued at cost, which approximates fair value. Security transactions are recorded on the trade date. Except for its investment contracts (Note E), the Plan's investments are held by bank-administered trust funds. Payables for outstanding security transactions represent trades which have occurred but have not yet settled.
8 The Plan presents in the statement of changes in net assets the net appreciation (depreciation) in the fair value of its investments which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. Dividend income is recorded on the ex-dividend date. Income from other investments is recorded as earned on an accrual basis. Investment income includes both dividend and interest income. Benefits are recorded when paid. The preparation of the financial statements in conformity with generally accepted accounting principles requires the Plan administrator to make significant estimates and assumptions that affect the reported amounts of net assets and liabilities available for benefits at the date of the financial statements and the change in net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from the estimates included in the financial statements. The Plan provides for various investment options in any combination of stocks, bonds, fixed income securities, mutual funds and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the statement of net assets available for plan benefits and the statement of changes in net assets available for plan benefits. C. Federal Income Tax Status: The Internal Revenue Service has determined and informed the Company by letter dated January 1999 that the Plan, as adopted on December 17, 1997, and related trust are designed in accordance with applicable sections of the Code. The Plan has been amended since applying for the determination letter. However, the Plan administrator and the Plan's legal counsel believe that the Plan is currently designed and being operated in compliance with applicable requirements of the Code. Therefore, no provision for income taxes has been included in the Plan's financial statements. D. Plan Termination: Although it has not expressed any intention to do so, the Company reserves the right under the Plan at any time or times to discontinue its contributions and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, amounts in participants' accounts will be distributed in a single lump sum; if the participant does not consent to an immediate distribution, the amount can be transferred to another defined contribution plan sponsored by the Company.
9 E. Investment Contracts: The Plan invests in collateralized fixed income investment portfolios which are managed by insurance companies and investment management firms. The credited interest rates are adjusted semiannually to reflect the experienced and anticipated yields to be earned on such investments, based on their book value. The annualized average yield and credited interest rates were as follows: Annualized Credited Average Yield Interest Rate For the year ended December 31, 1998: Banker's Trust (WBS 92-485) 6.85% 6.85% Metropolitan Life Insurance Company (GIC GA-12908) 6.58% 6.58% Metropolitan Life Insurance Company (GIC GA-13659) 6.10% 6.10% Prudential Asset Management Company (GIC 917163-001) 6.75% 6.75% Connecticut General (GIC 0025174) 5.58% 5.58% Fidelity IPL (633-GCDC) 5.62% 5.62% Monumental Life Insurance Company (GIC BDA00463FR-00) 7.84% 7.84% For the year ended December 31, 1997: Banker's Trust (WBS 92-485) 6.95% 6.95% Metropolitan Life Insurance Company (GIC GA-12908) 6.86% 6.86% Metropolitan Life Insurance Company (GIC GA-13659) 6.43% 6.43% Prudential Asset Management Company (GIC 917163-001) 6.99% 6.99% The contract values are subject to limitations in certain situations including large workforce reductions and plan termination. In the financial statements the two Metropolitan Life Insurance Company contracts are recorded as one investment option. F. Related Party Transactions: The Plan's trustee is Fidelity Management Trust Company (the "Trustee"). The Trustee holds the funds for the Plan and is responsible for managing the Plan's investment assets, executing all investment transactions, recording approved transactions, and, therefore these transactions qualify as party-in-interest. In accordance with the provisions of the Plan, the Trustee acts as the Plan's agent for purchases and sales of shares of Raytheon Company common stock. These transactions are performed on a Master Trust level. For the Master Trust, purchases amounted to $288,116,995 and sales amounted to $257,878,566 for the year ended December 31, 1998.
10 G. Transfers: Transfers include transfers of participant accounts, individually and/or in groups, between the Plan and other plans included in the Raytheon Company Master Trust for those participants, and/or groups of participants, who changed plans during the year. Transfers also include transfers of participant accounts, individually and/or in groups, between the Plan and similar savings plans of other companies for those participants who changed companies during the year. During the year, amounts rolled over by former employees of the defense business of Hughes Electronics Corporation who participated in the Hughes Thrift and Savings Plan and who became eligible to participate in the Plan totaled $12,290,388. H. Transfer Payables: As part of an overall effort to minimize plan design differences and increase administrative efficiencies, the Board of Directors of the Raytheon Company voted on December 16, 1998 to merge the participants and their account balances into the RESIP. The Plan ceased to exist on December 31, 1998 and effective January 1, 1999, the plan provisions of the RESIP govern. The transfer payable amount represents a complete transfer of assets to the RESIP.
11 I. Fund Data: The following is a summary of net assets available for plan benefits by fund as of December 31, 1998: Participant Directed Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Blue Chip Fund Fund Stock Fund Fund Fund Fund Fund Assets: Master trust investments: At contract value: Bankers Trust $ 780,134 Prudential Insurance Company of America 390,660 Metropolitan Life Insurance Company 980,564 Fidelity 42,535 Connecticut General 10,778 Monumental Life Insurance Company 11,324 At fair value: Fidelity Equity Income Fund $5,137,337 Raytheon Company Common Stock Fund $297,484 BT Pyramid Equity Index Fund $622,923 Fidelity Balanced Fund $2,134,411 Fidelity Magellan Fund $1,517,997 Fidelity Blue Chip Fund $1,315,762 Raytheon Class A Wasting Stock Fund Raytheon GMH Wasting Stock Fund Loans receivable from participants ---------- ---------- -------- -------- ---------- ---------- ---------- Total investments 2,215,995 5,137,337 297,484 622,923 2,134,411 1,517,997 1,315,762 ---------- ---------- -------- -------- ---------- ---------- ---------- Receivables: Accrued investment income and other receivables 1,767 1,315 Cash and cash equivalents 204,355 4,094 2,782 ---------- ---------- -------- -------- ---------- ---------- ---------- Total assets 2,420,350 5,137,337 303,345 627,020 2,134,411 1,517,997 1,315,762 ---------- ---------- -------- -------- ---------- ---------- ---------- Liabilities: Payable for outstanding purchases 719 Accrued expenses and other payables 690 706 Transfer payables 2,420,350 5,137,337 301,936 626,314 2,134,411 1,517,997 1,315,762 ---------- ---------- -------- -------- ---------- ---------- ---------- Total liabilities 2,420,350 5,137,337 303,345 627,020 2,134,411 1,517,997 1,315,762 ---------- ---------- -------- -------- ---------- ---------- ---------- Net assets available for plan benefits $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 ========== ========== ======== ======== ========== ========== ==========
12 Participant Directed Non-Participant Directed RTN.A GMH Raytheon Wasting Wasting Loan Common Fund Fund Fund Stock Fund Total Assets: Master trust investments: At contract value: Bankers Trust $ 780,134 Prudential Insurance Company of America 390,660 Metropolitan Life Insurance Company 980,564 Fidelity 42,535 Connecticut General 10,778 Monumental Life Insurance Company 11,324 At fair value: Fidelity Equity Income Fund 5,137,337 Raytheon Company Common Stock Fund $884,744 1,182,228 BT Pyramid Equity Index Fund 622,923 Fidelity Balanced Fund 2,134,411 Fidelity Magellan Fund 1,517,997 Fidelity Blue Chip Fund 1,315,762 Raytheon Class A Wasting Stock Fund $1,379,518 1,379,518 Raytheon GMH Wasting Stock Fund $1,845,149 1,845,149 Loans receivable from participants $987,221 987,221 ---------- ---------- -------- -------- ----------- Total investments 1,379,518 1,845,149 987,221 884,744 $18,338,541 ---------- ---------- -------- -------- ----------- Receivables: Accrued investment income and other receivables 14,176 252 5,254 22,764 Cash and cash equivalents 41,345 58,433 12,176 323,185 ---------- ---------- -------- -------- ----------- Total assets 1,435,039 1,903,834 987,221 902,174 $18,684,490 ---------- ---------- -------- -------- ----------- Liabilities: Payable for outstanding purchases 2,138 2,857 Accrued expenses and other payables 495 694 2,051 4,636 Transfer payables 1,434,544 1,903,140 987,221 897,985 18,676,997 ---------- ---------- -------- -------- ----------- Total liabilities 1,435,039 1,903,834 987,221 902,174 $18,684,490 ---------- ---------- -------- -------- ----------- Net assets available for plan benefits $ 0 $ 0 $ 0 $ 0 $ 0 ========== ========== ======== ========= ===========
13 I. Fund Data, Continued: The following is a summary of net assets available for plan benefits by fund as of December 31, 1997: Participant Directed 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 $ 852 Prudential Insurance Company of America 528 Metropolitan Life Insurance Company 900 At fair value: Fidelity Equity Income Fund* $8,617 Raytheon Company Common Stock* $3,715 BT Pyramid Equity Index Fund* $5,307 Fidelity Balanced Fund* $4,183 Fidelity Magellan Fund* $13,244 Fidelity Blue Chip Fund* Loans receivable from participants* ------ ------- ------ ------ ------ ------- Total investments 2,280 8,617 3,715 5,307 4,183 13,244 ------ ------- ------ ------ ------ ------- Receivables: Accrued investment income and other receivables 27 12 Cash and cash equivalents 23 67 52 ------ ------ ------ ------ ------ ------- Total assets 2,303 8,617 3,809 5,371 4,183 13,244 ------ ------ ------ ------ ------ ------- Liabilities: Payable for outstanding purchases 32 Accrued expenses and other payables 7 13 ------ ------ ------ ------ ------ ------ Total liabilities - - 39 13 - - ------ ------ ------ ------ ------ ------ Net assets available for plan benefits $2,303 $8,617 $3,770 $5,358 $4,183 $13,244 ====== ====== ====== ====== ====== ======= *Represents more than 5% of net assets available for plan benefits
14 Participant Non-Participant Directed Directed Raytheon Blue Chip Common Stock Fund Fund Total Assets: Master trust investments: At contract value: Bankers Trust $ 852 Prudential Insurance Company of America 528 Metropolitan Life Insurance Company 900 At fair value: Fidelity Equity Income Fund* 8,617 Raytheon Company Common Stock* $15,666 19,381 BT Pyramid Equity Index Fund* 5,307 Fidelity Balanced Fund* 4,183 Fidelity Magellan Fund* 13,244 Fidelity Blue Chip Fund* $8,593 8,593 ------ ------- ------- Total investments 8,593 15,666 61,605 ------ ------- ------- Receivables: Accrued investment income and other receivables 116 155 Cash and cash equivalents 284 426 ------ ------- ------- Total assets 8,593 16,066 62,186 ------ ------- ------- Liabilities: Payable for outstanding purchases 133 165 Accrued expenses and other payables 31 51 ------ ------ ------- Total liabilities - 164 216 ------ ------ ------- Net assets available for plan benefits $8,593 $15,902 $61,970 ====== ======= ======= *Represents more than 5% of net assets available for plan benefits
15 I. Fund Data, Continued: The following is a summary of changes in net assets available for plan benefits by fund for the year ended December 31, 1998: Participant Directed Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Blue Chip Fund Fund Stock Fund Fund Fund Fund Fund Additions to net assets attributable to: Investment income: Net appreciation (depreciation) of investments $ 83 $ 79,465 $ (5,737) $ 90,003 $ 64,373 $ 186,154 $ 160,692 Interest & Dividends 114,180 305,170 200,836 50,249 36,560 ---------- ---------- -------- -------- ---------- ---------- ---------- 114,263 384,635 (5,737) 90,003 265,209 236,403 197,252 ---------- ---------- -------- -------- ---------- ---------- ---------- Contributions and deferrals: Employee deferrals 170,269 487,537 209,165 276,620 233,608 690,136 460,557 Employer contributions Transfers 1,940,001 5,627,909 8,347 72,826 1,858,429 154,693 71,246 ---------- ---------- -------- -------- ---------- ---------- ---------- 2,110,270 6,115,446 217,512 349,446 2,092,037 844,829 531,803 ---------- ---------- -------- -------- ---------- ---------- ---------- Total additions 2,224,533 6,500,081 211,775 439,449 2,357,246 1,081,232 729,055 ---------- ---------- -------- -------- ---------- ---------- ---------- Deductions from net assets attributable to: Distributions to participants 85,804 231,655 6,581 46,826 105,585 60,996 43,794 Administrative expenses 348 948 21 32 359 74 59 Transfers 937 5,459 Transfers plan mergers 2,420,350 5,137,337 301,936 626,314 2,134,411 1,517,997 1,315,762 ---------- ---------- -------- -------- ---------- ---------- ---------- Total deductions 2,506,502 5,369,940 309,475 673,172 2,240,355 1,579,067 1,365,074 ---------- ---------- -------- -------- ---------- ---------- ---------- Interfund transfers 279,666 (1,138,758) 93,930 228,365 (121,074) 484,591 627,426 ---------- ---------- -------- -------- ---------- ---------- ---------- Decrease in net assets (2,303) (8,617) (3,770) (5,358) (4,183) (13,244) (8,593) Net assets, beginning of year 2,303 8,617 3,770 5,358 4,183 13,244 8,593 ---------- ---------- -------- ------- ---------- ---------- ---------- Net assets, end of year $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 ========== ========== ======== ======= ========== ========== ==========
16 Non-Participant Directed RTN.A GMH Raytheon Wasting Wasting Loan Common Fund Fund Fund Stock Fund Total Additions to net assets attributable to: Investment income: Net appreciation (depreciation) of investments $ 20,270 $ 474,057 $ 2,193 $ 1,071,553 Interest & Dividends $ 50,896 757,891 ---------- ----------- ---------- -------- ----------- 20,270 474,057 50,896 2,193 1,829,444 ---------- ----------- ---------- -------- ----------- Contributions and deferrals: Employee deferrals 2,527,892 Employer contributions 922,490 922,490 Transfers 1,754,018 1,985,775 727,507 7,977 14,208,728 ---------- ---------- ---------- -------- ----------- 1,754,018 1,985,775 727,507 930,467 17,659,110 ---------- ---------- ---------- -------- ----------- Total additions 1,774,288 2,459,832 778,403 932,660 19,488,554 ---------- ---------- ---------- -------- ----------- Deductions from net assets attributable to: Distributions to participants 81,677 124,977 45,827 15,728 849,450 Administrative expenses 427 706 21 2,995 Transfers 4,116 4,833 5,737 21,082 Transfers plan mergers 1,434,544 1,903,140 987,221 897,985 18,676,997 ---------- ---------- ---------- -------- ----------- Total deductions 1,520,764 2,033,656 1,033,048 919,471 19,550,524 ---------- ---------- ---------- -------- ----------- Interfund transfers (253,524) (426,176) 254,645 (29,091) - ---------- ---------- ---------- -------- ----------- Decrease in net assets - - - (15,902) (61,970) Net assets, beginning of year - - - 15,902 61,970 ---------- ---------- ---------- -------- ----------- Net assets, end of year $ 0 $ 0 $ 0 $ 0 $ 0 ========== ========== ========== ======== ===========
17 J. Master Trust: All plan investments are included under the Master Trust. At December 31, 1998, assets of the Plan represented 0% of the total assets under the Master Trust. This has decreased from .002% at December 31, 1997. The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1998: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $ 473,258,791 Prudential Life Insurance Company of America 236,989,116 Metropolitan Life Insurance Company* 594,847,154 Fidelity 25,803,449 Connecticut General 6,538,482 Monumental Life Insurance Company 6,869,338 At fair value: Fidelity Equity Income Fund* $1,464,615,296 Raytheon Company Common Stock Fund* $ 799,542,751 BT Pyramid Equity Index Fund* $ 745,602,791 Fidelity Balanced Fund* $ 442,796,289 Fidelity Magellan Fund* $ 379,680,454 Fidelity Blue Chip Fund* Templeton Foreign I Fund Fidelity Investment Grade Bond Fund Fidelity Retirement Money Market Vanguard Winsor Vanguard Wellesley TRP Small Cap Stock Raytheon Class A Wasting Stock Fund Raytheon GMH Wasting Stock Fund Loans receivable from participants -------------- -------------- -------------- -------------- -------------- -------------- Total investments 1,344,306,330 1,464,615,296 799,542,751 745,602,791 442,796,289 379,680,454 -------------- -------------- -------------- -------------- -------------- -------------- Receivables: Employer contribution Accrued investment income and other receivables 4,748,948 1,573,604 Transfer receivables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803 Cash and cash equivalents 123,969,201 11,004,025 3,330,147 -------------- -------------- -------------- -------------- -------------- -------------- Total assets 2,048,537,201 2,226,757,712 1,255,380,751 967,248,229 755,173,618 616,369,257 -------------- -------------- -------------- -------------- -------------- -------------- Liabilities: Payable for outstanding purchases 1,932,125 Accrued expenses and other payables 1,853,618 844,977 Transfer payables 580,261,670 762,142,416 440,085,027 216,741,687 312,377,329 236,688,803 -------------- -------------- -------------- -------------- -------------- -------------- Total liabilities 580,261,670 762,142,416 443,870,770 217,586,664 312,377,329 236,688,803 -------------- -------------- -------------- -------------- -------------- -------------- Net assets available for plan benefits $1,468,275,531 $1,464,615,296 $ 811,509,981 $ 749,661,565 $ 442,796,289 $ 379,680,454 ============== ============== ============== ============== ============== ==============
18 Templeton Investment Retirement Vanguard Vanguard Blue Chip Foreign I Grade Money Winsor Wellesley Fund Fund Bond Fund Market Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* Prudential Life Insurance Company of America Metropolitan Life Insurance Company* Fidelity Connecticut General Monumental Life Insurance Company At fair value: Fidelity Equity Income Fund* Raytheon Company Common Stock Fund* BT Pyramid Equity Index Fund* Fidelity Balanced Fund* Fidelity Magellan Fund* Fidelity Blue Chip Fund* $ 391,787,509 Templeton Foreign I Fund $ 6,966,704 Fidelity Investment Grade Bond Fund $ - Fidelity Retirement Money Market $ 13,202,524 Vanguard Winsor $ 41 Vanguard Wellesley $ 18 TRP Small Cap Stock Raytheon Class A Wasting Stock Fund Raytheon GMH Wasting Stock Fund Loans receivable from participants -------------- -------------- -------------- ------------- ------------- -------------- Total investments 391,787,509 6,966,704 - 13,202,524 41 18 -------------- -------------- -------------- ------------- ------------- -------------- Receivables: Employer contribution 3,595,261 Accrued investment income and other receivables Transfer receivables 191,269,141 6,966,652 16,715,590 Cash and cash equivalents -------------- -------------- -------------- ------------- ------------- -------------- Total assets 583,056,650 13,933,356 - 33,513,375 41 18 -------------- -------------- -------------- ------------- ------------- -------------- Liabilities: Payable for outstanding purchases Accrued expenses and other payables Transfer payables 191,269,141 6,966,652 16,715,590 -------------- -------------- -------------- ------------- ------------- -------------- Total liabilities 191,269,141 6,966,652 - 16,715,590 - - -------------- -------------- -------------- ------------- ------------- -------------- Net assets available for plan benefits $ 391,787,509 6,966,704 $ - $ 16,797,785 $ 41 $ 18 ============== ============== ============== ============== ============== ==============
19 TRP Small RTN.A GMH Cap Stock Wasting Wasting Loan Fund Fund Fund Fund Other(1) Total Assets: Investments: At contract value: Bankers Trust* $ 473,258,791 Prudential Life Insurance Company of America 236,989,116 Metropolitan Life Insurance Company* 594,847,154 Fidelity 25,803,449 Connecticut General 6,538,482 Monumental Life Insurance Company 6,869,338 At fair value: Fidelity Equity Income Fund* 1,464,615,296 Raytheon Company Common Stock Fund* 799,542,751 BT Pyramid Equity Index Fund* 745,602,791 Fidelity Balanced Fund* 442,796,289 Fidelity Magellan Fund* 379,680,454 Fidelity Blue Chip Fund* 391,787,509 Templeton Foreign I Fund 6,966,704 Fidelity Investment Grade Bond Fund - Fidelity Retirement Money Market 13,202,524 Vanguard Winsor 41 Vanguard Wellesley 18 TRP Small Cap Stock $ 348 348 Raytheon Class A Wasting Stock Fund $ 116,129,149 116,129,149 Raytheon GMH Wasting Stock Fund $ 172,859,819 172,859,819 Loans receivable from participants $ 250,687,865 250,687,865 -------------- -------------- -------------- -------------- ------------- -------------- Total investments 348 116,129,149 172,859,819 250,687,865 - 6,128,177,888 -------------- -------------- -------------- -------------- ------------- -------------- Receivables: Employer contribution 3,595,261 Accrued investment income and other receivables 1,193,397 23,640 7,539,589 Transfer receivables 120,761,325 178,295,618 117,046,618 $ 855,826,675 4,035,178,551 Cash and cash equivalents 3,480,490 5,474,220 147,258,083 -------------- -------------- -------------- ------------- -------------- -------------- Total assets 348 241,564,361 356,653,297 367,734,483 855,826,675 10,321,749,372 -------------- -------------- -------------- ------------- -------------- -------------- Liabilities: Payable for outstanding purchases 1,932,125 Accrued expenses and other payables 41,711 62,061 2,802,367 Transfer payables 120,761,325 178,295,618 117,046,618 3,179,351,876 -------------- -------------- -------------- ------------- -------------- -------------- Total liabilities - 120,803,036 178,357,679 117,046,618 - 3,184,086,368 -------------- -------------- -------------- ------------- -------------- -------------- Net assets available for plan benefits $ 348 $120,761,325 $ 178,295,618 $ 250,687,865 $ 855,826,675 $7,137,663,004 ============== ============== ============== ============== ============== ============== Percentage of Master Trust that are Plan assets - 0.00% *Represent more than 5% of net assets available for plan benefits (1) Other represents Raytheon plans merging in from outside the Master Trust. Note: Not all funds within the Master Trust are available options to participants in the Plan.
20 J. Master Trust, Continued: The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1997: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $351,035,073 Prudential Life Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* $782,799,011 Raytheon Company Common Stock Fund* $745,980,294 BT Pyramid Equity Index Fund* $484,781,406 Fidelity Balanced Fund $117,556,481 Fidelity Magellan Fund $91,863,155 Fidelity Blue Chip Fund Templeton Foreign I Fund Fidelity Investment Grade Bond Fund Fidelity Retirement Money Market Fund Loans receivable from participants ------------ ------------ ------------ ------------ ------------ ----------- Total investments 939,889,852 782,799,011 745,980,294 484,781,406 117,556,481 91,863,155 ------------ ------------ ------------ ------------ ------------ ----------- Receivables: Employer contribution Accrued investment income and other receivables 5,489,592 1,161,112 Cash and cash equivalents 9,232,100 13,498,051 4,761,268 ------------ ------------ ------------ ------------ ------------ ----------- Total assets 949,121,952 782,799,011 764,967,937 490,703,786 117,556,481 91,863,155 ------------ ------------ ------------ ------------ ------------ ----------- Liabilities: Payable for outstanding purchases 6,340,318 Accrued expenses and other payables 1,480,875 1,200,471 ------------- ------------ ------------ ------------ ------------ ----------- Total liabilities - - 7,821,193 1,200,471 - - ------------- ------------ ------------ ------------ ------------ ----------- Net assets available for plan benefits $949,121,952 $782,799,011 $757,146,744 $489,503,315 $117,556,481 $91,863,155 ============ ============ ============ ============ ============ ===========
21 Templeton Investment Retirement Blue Chip Foreign I Grade Money Loan Fund Fund Bond Fund Market Fund Fund Total Assets: Investments: At contract value: Bankers Trust* $351,035,073 Prudential Life Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* 782,799,011 Raytheon Company Common Stock Fund* 745,980,294 BT Pyramid Equity Index Fund* 484,781,406 Fidelity Balanced Fund 117,556,481 Fidelity Magellan Fund 91,863,155 Fidelity Blue Chip Fund $136,586,123 136,586,123 Templeton Foreign I Fund $5,471,176 5,471,176 Fidelity Investment Grade Bond Fund $1,548,125 1,548,125 Fidelity Retirement Money Market Fund $12,186,085 12,186,085 Loans receivable from participants $166,395,767 166,395,767 ------------ ---------- ---------- ----------- ------------ ------------- Total investments 136,586,123 5,471,176 1,548,125 12,186,085 166,395,767 3,485,057,475 ------------ ---------- ---------- ----------- ------------ -------------- Receivables: Employer contribution 4,015,100 4,015,100 Accrued investment income and other receivables 6,650,704 Cash and cash equivalents 27,491,419 ------------ ---------- ---------- ----------- ------------ -------------- Total assets 136,586,123 5,471,176 1,548,125 16,201,185 166,395,767 3,523,214,698 ------------ ---------- ---------- ----------- ------------ -------------- Liabilities: Payable for outstanding purchases 6,340,318 Accrued expenses and other payables 2,681,346 ------------ ---------- ---------- ----------- ------------ -------------- Total liabilities - - - - - 9,021,664 ------------ ---------- ---------- ----------- ------------ -------------- Net assets available for plan benefits $136,586,123 $5,471,176 $1,548,125 $16,201,185 $166,395,767 $3,514,193,034 ============ ========== ========== =========== ============ ============== Percentage of Master Trust that are Plan assets - 0.002% *Represent more than 5% of net assets available for plan benefits Note: Not all funds within the Master Trust are available options to participants in the Plan.
22 J. Master Trust, Continued: The following is a summary of investment income by fund under the Master Trust for the year ended December 31, 1998: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Fund Fund Stock Fund Fund Fund Fund Investment income: Net appreciation (depreciation) of assets $ 30,695 $ 49,019,748 $74,202,083 $149,571,006 $16,091,158 $62,195,801 Interest & Dividends 81,886,632 86,279,682 1,792 42,537,357 13,255,763 ----------- ------------ ----------- ------------ ----------- ----------- Total investment income/(loss) $81,917,327 $135,299,430 $74,203,875 $149,571,006 $58,628,515 $75,451,564 =========== ============ =========== ============ =========== ===========
23 Templeton Investment Retirement Vanguard Vanguard Blue Chip Foreign I Grade Money Winsor Wellesley Fund Fund Bond Fund Market Fund Fund Fund Investment income: Net appreciation (depreciation) of assets $60,264,181 $(1,095,980) $ 17,635 $2,864,378 $1,379,950 Interest & Dividends 13,550,491 752,610 162,858 $ 349,740 ----------- ----------- -------- ---------- ---------- ---------- Total investment income/(loss) $73,814,672 $ (343,370) $180,493 $ 349,740 $2,864,378 $1,379,950 =========== =========== ======== ========== ========== ==========
24 TRP Small RTN.A GMH Cap Stock Wasting Wasting Loan Fund Fund Fund Fund Total Investment income: Net appreciation (depreciation) of assets $ 15 $ (35,268) $44,604,025 $459,109,427 Interest & Dividends $15,334,403 254,111,328 ----------- ---------- ----------- ----------- ------------ Total investment income/(loss) $ 15 $ (35,268) $44,604,025 $15,334,403 $713,220,755 =========== ========== =========== =========== ============
1 EXHIBIT 99.10a CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (File No. 333-56117) of Raytheon Company of our report dated June 4, 1999 relating to the financial statements of the Raytheon Savings and Investment Plan (10014), which appears in this Form 10-K/A. PricewaterhouseCoopers LLP Boston, Massachusetts June 29, 1999