1 EXHIBIT 99.8 RAYTHEON CALIFORNIA HOURLY SAVINGS AND INVESTMENT PLAN FINANCIAL STATEMENTS TO ACCOMPANY 1997 FORM 5500 ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN UNDER ERISA OF 1974 FOR THE PERIOD FROM DECEMBER 17, 1997 TO DECEMBER 31, 1997 The supplemental schedules required to accompany the Plan's Form 5500 are not required since the Plan's assets are held in a Master Trust. Accordingly, detailed financial information, including the supplemental schedules, must be filed separately with the Department of Labor by the plan administrator. REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Raytheon Company: We have audited the accompanying statement of net assets available for plan benefits of the Raytheon California Hourly Savings and Investment Plan (the "Plan") as of December 31, 1997 and the related statement of changes in net assets available for plan benefits for the period from December 17, 1997 to December 31, 1997. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Plan as of December 31, 1997, and the changes in net assets available for plan benefits for the period from December 17, 1997 to December 31, 1997 in conformity with generally accepted accounting principles. Coopers & Lybrand LLP Boston, Massachusetts May 29, 1998 2 RAYTHEON CALIFORNIA HOURLY SAVINGS AND INVESTMENT PLAN STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS as of December 31, 1997 Assets: Master trust investments: At contract value (Notes B, E and G) $ 9,712 At fair value (Notes B, F and G) 123,623 -------- 133,335 -------- Receivables: Accrued investment income and other receivables 367 Cash and cash equivalents 1,025 -------- Total assets 134,727 -------- Liabilities: Payable for outstanding purchases 405 Accrued expenses and other payables 112 -------- Total liabilities 517 -------- Net assets available for plan benefits $134,210 ======== The accompanying notes are an integral part of the financial statements. 3 RAYTHEON CALIFORNIA HOURLY SAVINGS AND INVESTMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS for the period from December 17, 1997 to December 31, 1997 Additions to net assets attributable to: Investment income (Notes B, E and G): Net appreciation of investments $ 2,358 Interest 61 Dividends 711 -------- 3,130 -------- Contributions and deferrals: Employee deferrals 89,670 Employer contributions 41,410 -------- 131,080 -------- Total additions 134,210 -------- Increase in net assets 134,210 Net assets available for plan benefits, beginning of year -- -------- Net assets available for plan benefits, end of year $134,210 ======== The accompanying notes are an integral part of the financial statements. 4 A. Description of Plan: General The following description of the Raytheon California Hourly Savings and Investment Plan (the "Plan") provides only general information. Participants should refer to the plan document for a complete description of the Plan's provisions. The Plan, which was established on December 17, 1997, is a defined contribution plan covering certain employees of Raytheon Company (the "Company"). Effective December 17, 1997, employees assumed in connection with the merger of the defense business of Hughes Electronics Corporation with the Company that participated in the Hughes California Hourly Employees' Thrift and Savings Plan, became eligible to participate in the Plan. Participants have the option to rollover amounts accumulated in plans sponsored by the defense business of Hughes Electronics Corporation to the Plan. The option to make a rollover election will extend until December 1, 1998. Upon election, amounts will be rolled over into funds selected by the participant. As of December 31, 1997, no rollovers had been made; however, the ultimate amount to be transferred under this option cannot be estimated at this time. To participate in the Plan, eligible employees must have three months of service and may enter the Plan only on the first day of each month. The purpose of the Plan is to provide participants with a tax-effective means of meeting both short- and long-term investment objectives. The Plan is intended to be a "qualified cash or deferred arrangement" under Sections 401(a) and 401(k) of the Internal Revenue Code (the "Code"). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan's investments are held in the Raytheon Company Master Trust for Defined Contribution Plans ("Master Trust") with the assets of other defined contribution plans of Raytheon Company and subsidiaries. The trustee of the Master Trust maintains a separate account reflecting the equitable share in the Trust of each plan. Investment income and administrative expenses relating to the Master Trust are allocated to the individual plans based upon average monthly balances invested by each plan. 5 Contributions and Deferrals Eligible employees are allowed to defer to the Plan up to 12% of their salaries. The Company contributes amounts equal to 100% of each participant's deferral, up to a maximum of 4% of the participant's salary. The contributions are invested in Raytheon Company Class B common stock for two full plan years following the plan year for which the contributions are made, and are then allocated to participants' accounts. As of December 31, 1997, the annual employee deferral for a participant cannot exceed $9,500. Rollover contributions from other qualified plans are accepted by the Plan. Participants may invest their deferrals in increments of 1% in any combination of seven funds: (a)a Fixed Income Fund under which assets are invested primarily in contracts providing for fixed rates of interest for specified periods of time, (b)an Equity Fund which invests in shares of a mutual fund which consists primarily of income-producing equity securities, (c)a Raytheon Common Stock Fund which invests in shares of Raytheon Company Class B common stock, (d)a Stock Index Fund which invests in a commingled pool consisting primarily of equity securities and is designed to track the S&P 500 Index, (e) a Balanced Fund which invests in shares of a mutual fund which consists primarily of equity securities, bonds and money market instruments, (f) the Magellan Fund, a growth fund which invests primarily in equities of companies of all types and sizes, and (g) the Blue Chip Fund, a growth fund which invests primarily in equities of well known and established companies. Dividends and distributions from investments of the Equity Fund, the Raytheon Common Stock Fund, the Stock Index Fund, the Balanced Fund, the Magellan Fund and the Blue Chip Fund are reinvested in their respective funds; stock dividends, stock splits and similar changes are also reflected in the funds. Participant Accounts Each participant's account is credited with the participant's deferral, the Company's contribution and an allocation of plan earnings. Plan earnings are allocated based on account balances by fund. Vesting Participants are immediately vested in their voluntary deferrals plus actual earnings thereon. Vesting requirements for employer contributions plus earnings thereon may vary depending upon when an employee became eligible to participate in the Plan. Vesting generally occurs upon the earliest of the completion of five years of service or three years of Plan participation or upon retirement, death, disability, or attainment of normal retirement age. Forfeitures of the nonvested portions of terminated participants' accounts are used to reduce required contributions of the Company. Distributions to Participants A participant may withdraw all or a portion of deferrals, employer contributions and related earnings upon attainment of age 59 1/2. For reasons of financial hardship, as defined in the Plan document, a participant may withdraw all or a portion of deferrals. On termination of employment, a participant will receive a lump-sum distribution unless the vested account is valued in excess of $3,500 and the participant elects to defer distribution. A retiree or a beneficiary of a deceased participant may defer the distribution until January of the year following attainment of age 65. There were no distributions to participants during the year. 6 Loans to Participants A participant may borrow against a portion of the balance in the participant's account, subject to certain restrictions. The maximum amount of a loan is the lesser of one-half of the participant's vested account balance or $50,000. The minimum loan which may be granted is $500. The interest rate applied is equal to the prime rate published in the Wall Street Journal on the first business day in June and December of each year. Loans must be repaid over a period of up to 5 years by means of payroll deductions. In certain cases, the repayment period may be extended up to 15 years. Interest paid to the Plan on loans to participants is credited to the borrower's account in the investment fund to which repayments are made. Administrative Expenses Substantially all expenses of administering the Plan are paid by the plan participants. B. Summary of Significant Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting. The Plan's investment contracts are fully benefit-responsive and are therefore included in the financial statements at their contract value, defined as net contributions and deferrals plus interest earned on the underlying investments at contracted rates. Because the investment contracts are fully benefit-responsive, contract values approximate fair value. Investments in mutual funds and the commingled pool are valued at the closing net asset value reported on the last business day of the year. Investments in securities (common stocks) traded on a national securities exchange are valued at the last reported sales price on the last business day of the year. Cash equivalents are short-term money market instruments and are valued at cost which approximates fair value. Security transactions are recorded on trade date. Except for its investment contracts (Note E), the Plan's investments are held by bank-administered trust funds. Payables for outstanding security transactions represent trades which have occurred but have not yet settled. The Plan presents in the statement of changes in net assets the net appreciation (depreciation) in the fair value of its investments which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. Dividend income is recorded on the ex-dividend date. Income from other investments is recorded as earned on an accrual basis. Benefits are recorded when paid. 7 The preparation of the financial statements in conformity with generally accepted accounting principles requires the plan administrator to make significant estimates and assumptions that affect the reported amounts of net assets and liabilities available for benefits at the date of the financial statements and the change in net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from the estimates included in the financial statements. The Plan provides for various investment options in any combination of stocks, bonds, fixed income securities, mutual funds and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect participants' account balances and the amounts reported in the statement of net assets available for plan benefits and the statement of changes in net assets available for plan benefits. C. Federal Income Tax Status: Given that the Plan was established effective December 17, 1997, the Plan has not received a tax determination letter to date. Raytheon Company has submitted an application with the Internal Revenue Service under the 401(b) regulation of the Internal Revenue Code and expects to receive the determination letter by December 31, 1998. The Plan administrator and the Plan's legal counsel believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, no provision for income taxes has been included in the Plan's financial statements. D. Plan Termination: Although it has not expressed any intention to do so, the Company reserves the right under the Plan at any time or times to discontinue its contributions and to terminate the Plan subject to the provisions of ERISA. In the event of plan termination, amounts in participants' accounts will be distributed in a single lump sum; if the participant does not consent to an immediate distribution, the amount can be transferred to another defined contribution plan sponsored by the Company. E. Investment Contracts: The Plan invests in collateralized fixed income investment portfolios (with no expiration date), three of which are managed by insurance companies and one of which is managed by an investment management firm. The credited interest rates are adjusted semiannually to reflect the experienced and anticipated yields to be earned on such investments, based on their book value. The annualized average yield and credited interest rates were as follows: 8 Annualized Credited Average Interest Yield Rate For the year ended December 31, 1997: Bankers Trust (WBS 92-485) 6.95% 6.95% Metropolitan Life Insurance Company (GIC GA-12908) 6.86% 6.86% Metropolitan Life Insurance Company (GIC GA-13659) 6.43% 6.43% Prudential Asset Management Company (GIC 917163-001) 6.99% 6.99% The contract values are subject to limitations in certain situations including large workforce reductions and plan termination. In the financial statements, the two Metropolitan Life Insurance Company contracts are recorded as one investment option. F. Related Party Transactions: In accordance with the provisions of the Plan, Fidelity Management Trust Company (the "Trustee") acts as the Plan's agent for purchases and sales of shares of Raytheon Company Class B common stock. These transactions are performed on the Master Trust level. For the Master Trust, purchases amounted to $200,689,057 and sales amounted to $102,165,608 for the year ended December 31, 1997. 9 G. Fund Data: The following is a summary of net assets available for plan benefits by fund as of December 31, 1997: Non-Participant Participant-Directed Directed Fixed Raytheon Stock Raytheon Income Equity Common Index Balanced Magellan Blue Chip Common Fund Fund Stock Fund Fund Fund Fund Fund Stock Fund Total Assets: Master trust investments: At contract value: Bankers Trust $3,627 $3,627 Prudential Insurance Company of America 2,250 2,250 Metropolitan Life Insurance Company 3,835 3,835 At fair value: Fidelity Equity Income Fund* $21,159 21,159 Raytheon Company Common Stock* $6,484 $41,198 47,682 BT Pyramid Equity Index Fund* $6,823 6,823 Fidelity Balanced Fund* $9,931 9,931 Fidelity Magellan Fund* $23,519 23,519 Fidelity Blue Chip Fund* $14,509 14,509 ------ ------- ------ ------ ------ ------- ------- ------- -------- Total investments 9,712 21,159 6,484 6,823 9,931 23,519 14,509 41,198 133,335 ------ ------- ------ ------ ------ ------- -------- ------- -------- Receivables: Accrued investment income and other receivables 48 16 303 367 Cash and cash equivalents 95 117 67 746 1,025 ------ ------- ------ ------ ------ ------- ------- ------- -------- Total assets 9,807 21,159 6,649 6,906 9,931 23,519 14,509 42,247 134,727 ------ ------- ------ ------ ------ ------- ------- ------- -------- Liabilities: Payable for security purchases 55 350 405 Accrued expenses and other payables 13 17 82 112 ------ ------- ------ ------ ------ ------- ------- ------- -------- Total liabilities 68 17 432 517 ------ ------- ------ ------ ------ ------- ------- ------- -------- Net assets available for plan benefits $9,807 $21,159 $6,581 $6,889 $9,931 $23,519 $14,509 $41,815 $134,210 ====== ======= ====== ====== ====== ======= ======= ======= ======== *Represents more than 5% of net assets available for plan benefits 10 G. Fund Data, continued: The following is a summary of changes in net assets available for plan benefits by fund for the period from December 17, 1997 to December 31, 1997: Non-Participant Participant-Directed Directed Fixed Raytheon Stock Raytheon Income Equity Common Index Balanced Magellan Blue Chip Common Fund Fund Stock Fund Fund Fund Fund Fund Stock Fund Total Additions to net assets attributable to: Investment income: Net appreciation (depreciation) of investments $ 699 $ (40) $ 238 $ 214 $ 925 $ 570 $ (248) $ 2,358 Interest $ 10 7 5 39 61 Dividends 97 614 711 ------ ------- ------ ------ ------ ------- ------- ------ -------- 10 699 64 243 214 925 570 405 3,130 ------ ------- ------ ------ ------ ------- ------- ------ -------- Contributions and deferrals: Employee deferrals 9,797 20,460 6,517 6,646 9,717 22,594 13,939 89,670 Employer contributions 41,410 41,410 ------ ------- ------ ------ ------ ------- ------- ------- -------- 9,797 20,460 6,517 6,646 9,717 22,594 13,939 41,410 131,080 ------ ------- ------ ------ ------ ------- ------- ------- -------- Total additions 9,807 21,159 6,581 6,889 9,931 23,519 14,509 41,815 134,210 ------ ------- ------ ------ ------ ------- ------- ------- -------- Increase in net assets 9,807 21,159 6,581 6,889 9,931 23,519 14,509 41,815 134,210 Net assets available for plan benefits, beginning of year -- ------ ------- ------ ------ ------ ------- ------- ------- -------- benefits, end of year $9,807 $21,159 $6,581 $6,889 $9,931 $23,519 $14,509 $41,815 $134,210 ====== ======= ====== ====== ====== ======= ======= ======= ======== 11 H. Master Trust: All plan investments are included under the Master Trust. At December 31, 1997, assets of the Plan represented less than 1% of the total assets under the Master Trust. The following is a summary of net assets available for plan benefits by fund under the Master Trust as of December 31, 1997: Fixed Raytheon Stock Income Equity Common Index Balanced Magellan Blue Chip Fund Fund Stock Fund Fund Fund Fund Fund Assets: Investments: At contract value: Bankers Trust* $351,035,073 Prudential Insurance Company of America* 217,731,699 Insurance Company* 371,123,080 Fidelity Equity Income Fund* $782,799,011 Raytheon Company Common Stock* $745,980,294 BT Pyramid Equity Index Fund* $484,781,406 Fidelity Balanced Fund $117,556,481 Fidelity Magellan Fund $91,863,155 Fidelity Blue Chip Fund $136,586,123 Templeton Foreign I Fund Fidelity Investment Grade Bond Fund Money Market Fund Loans receivable from participants ------------ ------------ ------------ ------------ ------------ ----------- ------------ Total investments 939,889,852 782,799,011 745,980,294 484,781,406 117,556,481 91,863,155 136,586,123 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Receivables: Employer contribution Accrued investment income and other receivables 5,489,592 1,161,112 Cash and cash equivalents 9,232,100 13,498,051 4,761,268 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Total assets 949,121,952 782,799,011 764,967,937 490,703,786 117,556,481 91,863,155 136,586,123 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Liabilities: Payables for outstanding purchases 6,340,318 other payables 1,480,875 1,200,471 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Total liabilities 7,821,193 1,200,471 ------------ ------------ ------------ ------------ ------------ ----------- ------------ Net assets available for plan benefits $949,121,952 $782,799,011 $757,146,744 $489,503,315 $117,556,481 $91,863,155 $136,586,123 ============ ============ ============ ============ ============ =========== ============ Percentage of Master Trust ^ ^ ^ ^ ^ ^ ^ that are plan assets of the Raytheon California Hourly Savings and Investment Plan *Represents more than 5% of net assets available for plan benefits ^Represents less than 1% of plan assets under the Master Trust + As of December 31, 1997, there were no loans outstanding in the Raytheon California Hourly Savings and Investment Plan. N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund, and Retirement Money Market Fund are not available for the Raytheon California Hourly Savings and Investment Plan. 12 Templeton Investment Retirement Foreign I Grade Money Loan Fund Bond Fund Market Fund Fund Total Assets: Investments: At contract value: Bankers Trust* $ 351,035,073 Prudential Insurance Company of America* 217,731,699 Metropolitan Life Insurance Company* 371,123,080 At fair value: Fidelity Equity Income Fund* 782,799,011 Raytheon Company Common Stock* 745,980,294 BT Pyramid Equity Index Fund* 484,781,406 Fidelity Balanced Fund 117,556,481 Fidelity Magellan Fund 91,863,155 Fidelity Blue Chip Fund 136,586,123 Templeton Foreign I Fund $5,471,176 5,471,176 Fidelity Investment Grade Bond Fund $1,548,125 1,548,125 Fidelity Retirement Money Market Fund $12,186,085 12,186,085 Loans receivable from participants $166,395,767 166,395,767 ---------- ---------- ----------- ------------ -------------- Total investments 5,471,176 1,548,125 12,186,085 166,395,767 3,485,057,475 ---------- ---------- ----------- ------------ -------------- Receivables: Employer contribution 4,015,100 4,015,100 Accrued investment income and other receivables 6,650,704 Cash and cash equivalents 27,491,419 ---------- ---------- ----------- ------------ -------------- Total assets 5,471,176 1,548,125 16,201,185 166,395,767 3,523,214,698 ---------- ---------- ----------- ------------ -------------- Liabilities: Payables for outstanding purchases 6,340,318 Accrued expenses and other payables 2,681,346 ---------- ---------- ----------- ------------ -------------- Total liabilities 9,021,664 ---------- ---------- ----------- ------------ -------------- Net assets available for plan benefits $5,471,176 $1,548,125 $16,201,185 $166,395,767 $3,514,193,034 ========== ========== =========== ============ ============== N/A N/A N/A + ^ *Represents more than 5% of net assets available for plan benefits ^Represents less than 1% of plan assets under the Master Trust + As of December 31, 1997, there were no loans outstanding in the Raytheon California Hourly Savings and Investment Plan. N/A: The Templeton Foreign I Fund, Investment Grade Bond Fund, and Retirement Money Market Fund are not available for the Raytheon California Hourly Savings and Investment Plan. 13 H. Master Trust, continued: The following is a summary of investment income by fund under the Master Trust for the year ended December 31, 1997: Fixed Raytheon Income Common Stock Balanced Magellan Blue Chip Fund Equity Fund Stock Fund Index Fund Fund Fund Fund Investment income: Net appreciation (depreciation) of assets $ (191,924) $132,974,182 $30,715,963 $109,162,707 $ 6,388,316 $ 9,026,047 $15,474,118 Interest 62,319,073 673,934 312,511 Dividends 42,443,971 11,118,152 13,680,351 5,217,835 6,302,875 ----------- ------------ ----------- ------------ ----------- ----------- ----------- Total investment income/(loss) $62,127,149 $175,418,153 $42,508,049 $109,475,218 $20,068,667 $14,243,882 $21,776,993 =========== ============ =========== ============ =========== =========== =========== 14 Templeton Investment Retirement Foreign I Grade Money Loan Fund Bond Fund Market Fund Fund Total Investment income: Net appreciation (depreciation) of assets $(826,396) $22,581 $302,745,594 Interest $10,848,204 74,153,722 Dividends 549,717 36,337 $266,835 79,616,073 --------- ------- ------- ----------- ------------ Total investment income/(loss) $(276,679) $58,918 $266,835 $10,848,204 $456,515,389 ========= ======= ======== =========== ============