UNITED STATES
                 SECURITIES AND EXCHANGE COMMISSION
                       WASHINGTON, D.C. 20549


                             FORM 10-Q


[X] Quarterly Report Pursuant to Section 13 or 15(d)of the
    Securities Exchange Act of 1934

    For the Quarter Ended October 1, 2000, or

[ ] 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 1-9298


                          RAYTECH CORPORATION
          (Exact Name of Registrant as Specified in its Charter)


       DELAWARE                                        06-1182033
(State or other Jurisdiction of                     (I.R.S. Employer
Incorporation or Organization)                      Identification No.)


 Suite 295, Four Corporate Drive
      Shelton, Connecticut                                06484
(Address of Principal Executive Offices)                (Zip Code)


                         203-925-8023
                  (Registrant's Telephone Number)

Indicate by check mark whether the Registrant (1) has filed all
reports 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

As of November 10, 2000, 3,519,313 shares of the Registrant's
common stock, par value $1.00, were issued and outstanding.


                             Page 1 of 43




                         RAYTECH CORPORATION

                                INDEX


                                                           Page
                                                          Number

PART I.   FINANCIAL INFORMATION:

Item 1.   Financial Statements

          Condensed Consolidated Balance Sheets
          at October 1, 2000 (Unaudited)
          and January 2, 2000                                3

          Condensed Unaudited Consolidated Statements of
          Operations for the thirteen and thirty-nine
          weeks ended October 1, 2000 and October 3,
          1999                                               4

          Condensed Unaudited Consolidated Statements
          of Cash Flows for the thirty-nine  weeks
          ended October 1, 2000 and October 3, 1999          5

          Condensed Unaudited Consolidated Statements of
          Shareholders' Equity for the thirty-nine weeks
          ended October 1, 2000 and October 3, 1999          6

          Notes to Condensed Unaudited Consolidated
          Financial Statements                               7

Item 2.   Management's Discussion and Analysis of
          Financial Condition and Results of Operations     23

Item 3.   Quantitative and Qualitative Disclosures
          About Market Risk                                 29

PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings                                 30

Item 4.   Submission of Matters to a Vote of
          Security Holders                                  40

Item 6.   Exhibits and Reports on Form 8-K                  41

          Signature                                         43



                                  -2-





RAYTECH CORPORATION
<TABLE>
<CAPTION>

CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data)

                                                                 Oct. 1,      Jan. 2,
                                                                  2000         2000
At                                                             (Unaudited)
<S>                               <C>      <C>              <C> <C>          <C>


ASSETS
Current assets
  Cash and cash equivalents                                  $   10,942      $ 10,746
  Trade accounts receivable, net                                 31,467        31,804
  Inventories                                                    34,372        33,325
  Other current assets                                            7,238         8,169
      Total current assets                                       84,019        84,044
Property, plant and equipment                                   183,815       180,202
  Less accumulated depreciation                                (103,664)      (98,130)
      Net property, plant and equipment                          80,151        82,072
Intangible assets                                                19,381        20,074
Deferred income taxes                                           140,774           304
Other assets                                                      2,319         2,192
Total assets                                                 $  326,644      $188,686

LIABILITIES
Current liabilities
  Notes payable                                              $   11,635      $ 19,175
  Current portion of long-term debt - Raymark                    11,167        11,167
  Current portion of long-term debt                               1,220         1,362
  Accounts payable                                               15,192        18,505
  Accrued liabilities                                            21,466        22,634
      Total current liabilities                                  60,680        72,843
Liabilities subject to compromise                             7,208,933            -
Long-term debt due to Raymark                                     5,231         9,206
Long-term debt                                                    6,674         6,581
Postretirement benefits other than pensions                      12,913        12,132
Other long-term liabilities                                       8,123         7,136
Total liabilities                                             7,302,554       107,898
Commitments and Contingencies

SHAREHOLDERS' EQUITY (DEFICIT)
Capital stock
  Cumulative preferred stock, no par value
    800,000 shares authorized, none issued & outstanding              -            -
  Common stock, par value $1.00
    7,500,000 shares authorized, 5,651,372 and 5,612,963
    issued and outstanding at October 1, 2000 and
    January 2, 2000, respectively                                 5,651         5,613
Additional paid in capital                                       70,631        70,564
Retained earnings (accumulated deficit)                      (7,046,699)        9,337
Accumulated other comprehensive loss                               (932)         (165)
                                                             (6,971,349)       85,349
Less treasury shares at cost                                     (4,561)       (4,561)
      Total shareholders' equity (deficit)                   (6,975,910)       80,788
Total liabilities and shareholders' equity (deficit)        $   326,644      $188,686

<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
                                   -3-



<PAGE>
                       RAYTECH CORPORATION
         CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                (in thousands, except share data)
                           (unaudited)

<TABLE>
<CAPTION>





                                       For the 13 Weeks Ended     For the 39 Weeks Ended
                                       October 1,   October 3,    October 1,   October 3,
                                          2000         1999         2000          1999

<S>        <C>                       <C>  <C>        <C>       <C>            <C>



Net Sales                             $  56,755      $ 62,473   $  185,352    $ 195,649
Cost of sales                           (42,743)      (47,996)    (138,407)    (148,295)

       Gross profit                      14,012        14,477       46,945       47,354

Selling and administrative expenses      (7,827)       (8,894)     (24,718)     (25,726)

       Operating profit                   6,185         5,583       22,227       21,628

Interest expense                           (609)         (482)      (1,589)      (1,300)
Interest expense - Raymark                  (70)          (70)        (210)        (210)
Other income, net                           412           229        1,040          572
Income before provision for asbestos
  litigation, provision for environmental
  and other claims, income taxes
  and minority interest                   5,918         5,260       21,468       20,690

Provision for environmental and
  other claims                              -             -       (447,750)         -
Provision for asbestos litigation           -             -     (6,760,000)         -
Income (loss) before income taxes
  and minority interest                   5,918         5,260   (7,186,282)      20,690
Income tax (provision) benefit           (2,483)       (1,526)     131,453       (6,000)
Income (loss) before minority
  interest                                3,435         3,734   (7,054,829)      14,690

Minority interest                          (463)         (356)      (1,207)      (1,485)

Net income (loss)                    $    2,972      $  3,378  $(7,056,036)   $  13,205

Basic earnings (loss) per share      $      .84      $    .98  $ (2,017.78)   $    3.85

Diluted earnings (loss) per share    $      .84      $    .94  $ (2,017.78)   $    3.76

<FN>
The accompanying notes are an integral part of these statements.
</TABLE>


                                    -4-



<PAGE>
                         RAYTECH CORPORATION
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (in thousands)
                             (unaudited)

<TABLE>
<CAPTION>


                                                        Oct. 1,      Oct. 3,
For the 39 Weeks Ended                                   2000         1999

  <S> <C>    <S>                                    <C>            <C>

Cash flows from operating activities:
  Net (loss) income                                 $(7,056,036)   $ 13,205
    Adjustments to reconcile net (loss) income
      to net cash provided by operations:
    Deferred income tax                                (140,470)        -
    Depreciation and amortization                         9,527       8,691
    Provision for asbestos litigation,
      environmental and other claims                  7,207,750         -
    Income applicable to minority interest,
      net of dividends                                    1,207       1,485
    Changes in operating assets and liabilities
      and other items                                      (765)     (7,769)
    Net cash provided by operating activities            21,213      15,612

Cash flow from investing activities:
  Capital expenditures                                   (9,367)    (15,754)
  Proceeds on sales of property, plant and equipment        127         382
    Net cash used in investing activities                (9,240)    (15,372)

Cash flow from financing activities:
  Cash overdraft                                           (993)      2,284
  Net (payments) borrowings on short-term notes          (7,229)      1,461
  Principal payments on long-term borrowings               (257)       (190)
  Proceeds from long-term borrowings                        653       1,231
  Payments on borrowings from Raymark                    (3,975)     (2,694)
  Proceeds from exercise of stock options                   105          71

    Net cash (used in) provided by financing
      activities                                        (11,696)      2,163

Effect of exchange rate changes on cash                     (81)       (119)

Net change in cash and cash equivalents                     196       2,284

Cash and cash equivalents at beginning of period         10,746       7,482

Cash and cash equivalents at end of period         $     10,942    $  9,766

<FN>
The accompanying notes are an integral part of these statements.
</TABLE>

                                -5-


<PAGE>
                           RAYTECH CORPORATION
   CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
                      (in thousands, except shares)
                               (unaudited)

<TABLE>
<CAPTION>

                                                                            Treasury
                                                Retained     Accumulated     Shares
                                   Additional   Earnings       Other         At Cost
                            Common   Paid in  (Accumulated  Comprehensive  (2,132,059
                            Stock    Capital     Deficit)       Loss         Shares)     Total

  <C>     <C>              <C>      <C>     <C>              <C>           <C>      <C>

Balance,
 January 3, 1999           $5,553   $70,501    $ (7,027)     $   (169)     $(4,561)     $64,297

Comprehensive income:

  Net income                                     13,205                                  13,205

  Changes during
   the period                                                  (1,185)                   (1,185)

Total comprehensive
  income                                         13,205        (1,185)                   12,020

Stock options exercised
  (29,359 shares)              30        41                                                  71

Balance,
  October 3, 1999          $5,583   $70,542     $ 6,178       $(1,354)     $(4,561)     $76,388




Balance,
 January 2, 2000           $5,613   $70,564     $ 9,337      $  (165)      $(4,561)     $80,788

Comprehensive loss:

  Net loss                                   (7,056,036)                             (7,056,036)


  Changes during
   the period                                                   (767)                      (767)

Total comprehensive loss                     (7,056,036)        (767)                (7,056,803)
Stock options exercised
  (38,409 shares)              38        67                                                 105

Balance,
  October 1, 2000          $5,651   $70,631 $(7,046,699)     $  (932)      $(4,561) $(6,975,910)




<FN>
The accompanying notes are an integral part of these statements.
</TABLE>




                       RAYTECH CORPORATION
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (dollars in thousands, except share data)
                            (Unaudited)



NOTE A - Formation of Raytech Corporation, Sale of Raymark,
         Chapter 11 Proceeding and Other Litigation
        Raytech Corporation ("Raytech" or the "Company") was
incorporated in June, 1986 in Delaware and held as a subsidiary of
Raymark Corporation ("Raymark").  In October 1986, Raytech became
the publicly traded (NYSE) holding company of Raymark stock through
a triangular merger restructuring plan approved by Raymark's
shareholders whereby each share of common stock of Raymark was
automatically converted into both a share of Raytech common stock
and a right to purchase a warrant for Raytech common stock.  The
warrants expired on October 1, 1994.  The purpose of the formation
of Raytech and the restructuring plan was to provide a means to gain
access to new sources of capital and borrowed funds to be used to
finance the acquisition and operation of new businesses in a
corporate structure that should not subject it or such acquired
businesses to any asbestos-related or other liabilities of Raymark
under the doctrine of successor liability, piercing the corporate
veil and fraudulent conveyance.

        Prior to the formation of Raytech, Raymark had been named
as a defendant in more than 88,000 lawsuits claiming substantial
damages for injury or death from exposure to airborne asbestos
fibers.  Subsequent to the divestiture sale of Raymark in 1988,
lawsuits continued to be filed against Raymark at the rate of
approximately 1,000 per month until an involuntary petition in
bankruptcy was filed against Raymark in February 1989, which stayed
all its litigation.  In August 1996, the involuntary petition filed
against Raymark was dismissed following a trial and the stay was
lifted.  However, in March 1998, Raymark filed a voluntary
bankruptcy petition again staying the litigation.

        In accordance with the restructuring plan, Raytech
purchased the Wet Clutch and Brake Division and German subsidiary in
1987 from its then wholly-owned subsidiary, Raymark.  Each such
acquisition was financed through borrowed funds from new lenders
and Raytech stock and notes.  Pursuant to these acquisitions,
Raymark agreed to indemnify Raytech for any future liabilities and
costs that may result from asbestos litigation.  Management believed
that each purchase by Raytech from Raymark complied with Raytech's
restructuring plan principles of (i) paying fair market value, (ii)
acquiring businesses that did not give rise to any asbestos-related
or other claims against Raymark, (iii) permitting Raymark to retain
the proceeds for its ongoing business and creditors, (iv) entering


<PAGE>
the transactions in good faith and not to hinder, delay or defraud
creditors, and (v) conducting its affairs independent of Raymark.

        In May 1988, following shareholder approval, Raytech sold
all of the Raymark stock to Asbestos Litigation Management, Inc.,
thereby divesting itself of Raymark.  The purchase price of the
stock was affected by Raymark's substantial asbestos-related
liabilities.

        Despite the restructuring plan implementation and
subsequent divestiture of Raymark, Raytech was named a co-defendant
with Raymark and other named defendants in approximately 3,300
asbestos-related lawsuits as a successor in liability to Raymark.
Until February 1989, the defense of all such lawsuits was provided
to Raytech by Raymark in accordance with the indemnification
agreement included as a condition of the purchase of the Wet Clutch
and Brake Division and German subsidiary from Raymark in 1987.
However, subsequent to the involuntary bankruptcy proceedings
against Raymark, a restrictive insurance funding order was issued by
an Illinois Court, denying defense costs, and another Raymark
insurance carrier had been declared insolvent.  These circumstances
caused Raymark to be unable to fund the costs of defense to Raytech
in the asbestos-related lawsuits referenced above. Raytech
management was informed that Raymark's cost of defense and
disposition of cases up to the automatic stay of litigation in 1989
under the involuntary bankruptcy proceedings was approximately $333
million of Raymark's total insurance coverage of approximately $395
million.  It has also been informed that as a result of the
dismissal of the involuntary petition, Raymark encountered newly
filed asbestos-related lawsuits but had received $27 million from a
state guarantee association to make up the insurance policies of the
insolvent carrier and had $32 million in other policies to defend
against such litigation.  In March 1998, Raymark filed a voluntary
bankruptcy petition as a result of several large asbestos-related
judgments.

        In an asbestos-related personal injury case decided in
October 1988 in a U.S. District Court in Oregon, Raytech was ruled
under Oregon equity law to be a successor to Raymark's asbestos-
related liability.  The successor ruling was appealed by Raytech and
in October 1992 the Ninth Circuit Court of Appeals
affirmed the District Court's judgment on the grounds stated in the
District Court's opinion.  The effect of this decision
extends beyond the Oregon District due to a Third Circuit Court of
Appeals decision in a related case cited below wherein Raytech was
collaterally estopped (precluded) from relitigating the issue of its
successor liability for Raymark's asbestos-related liabilities.

        As the result of the inability of Raymark to fund Raytech's
costs of defense recited above, and in order to obtain a ruling
binding across all jurisdictions as to whether Raytech is liable
as a successor for asbestos-related and other claims, including

<PAGE>
claims yet to be filed relating to the operations of Raymark or its
predecessors, on March 10, 1989, Raytech filed a petition seeking
relief under Chapter 11 of Title 11, United States Code in the
United States Bankruptcy Court, District of Connecticut.  Under
Chapter 11, substantially all litigation against Raytech has been
stayed while the debtor corporation and its non-filed operating
subsidiaries continue to operate their businesses in the ordinary
course under the same management and without disruption to
employees, customers or suppliers.  In the Bankruptcy Court a
creditors' committee was appointed, comprised primarily of asbestos
claimants' attorneys.  In August 1995, an official committee of
equity security holders was appointed  relating to a determination
of equity security holders' interest in the estate.

        In June 1989 Raytech filed a class action in the Bankruptcy
Court against all present and future asbestos claimants seeking a
declaratory judgment that it not be held liable for the asbestos-
related liabilities of Raymark.  It was the intent of Raytech to
have this case heard in the U.S. District Court, and since the
authority of the Bankruptcy Court is referred from the U.S. District
Court, upon its motion and argument the U.S. District Court withdrew
its reference of the case to the Bankruptcy Court and thereby agreed
to hear and decide the case.  In September 1991, the U.S. District
Court issued a ruling dismissing one count of the class action
citing as a reason the preclusive effect of the 1988 Oregon case,
previously discussed, under the doctrine of collateral estoppel
(conclusiveness of judgment in a prior action), in which Raytech was
ruled to be a successor to Raymark's asbestos liability under Oregon
law.  The remaining counts before the U.S. District Court involve
the transfer of Raymark's asbestos-related liabilities to Raytech on
the legal theories of alter-ego and fraudulent conveyance.  Upon a
motion for reconsideration, the U.S. District Court affirmed its
prior ruling in February 1992.  Also, in February 1992, the U.S.
District Court transferred the case in its entirety to the U.S.
District Court for the Eastern District of Pennsylvania.  Such
transfer was made by the U.S. District Court without motion from any
party in the interest of the administration of justice as
stated by the U.S. District Court.  In December 1992, Raytech filed
a motion to activate the case and to obtain rulings on the remaining
counts which was denied by the U.S. District Court.  In October
1993, the creditors' committee asked the Court to certify the
previous dismissal of the successor liability count.  In February
1994, the U.S. District Court granted the motion to certify and the
successor liability dismissal was accordingly appealed.  In May
1995, the Third Circuit Court of Appeals ruled that Raytech is
collaterally estopped (precluded) from relitigating the issue of its
successor liability as ruled in the 1988 Oregon case recited above,
affirming the U.S. District Court's ruling of dismissal.  A petition
for a writ of certiorari was denied by the U.S. Supreme Court in
October 1995.  The ruling leaves the Oregon case, as affirmed by the
Ninth Circuit Court of Appeals, as the prevailing decision holding
Raytech to be a successor to Raymark's asbestos-related liabilities.


<PAGE>
        As the result of the Court rulings recited above holding
Raytech a successor to Raymark's asbestos-related liabilities,
Raytech halted payments to Raymark under the 1987 Asset Purchase
Agreement in May 1995.  However, in February 1997, with Raymark
temporarily out of bankruptcy, Raytech resumed making payments
pursuant to the Agreement.  As the result of the creditors'
committee's action to halt the payments, the Bankruptcy Court
ordered the payments stopped in January 1998.  In retaliation in
December 1997, Raymark commenced 33 separate lawsuits against
Raytech subsidiaries in various jurisdictions from New York to
California ("Raymark Litigation") demanding payment or the return of
assets for breach of contract.  Raytech filed an adversary
proceeding complaint to halt the Raymark litigation and was granted
a temporary restraining order in December 1997 by the Bankruptcy
Court that remains in effect.  The creditors' committee intervened
in the action in support of the restraining order.

        In March and April 1998, Raymark and its parent, Raymark
Corporation, filed voluntary petitions in bankruptcy in a Utah Court
which stayed all litigation in the Raytech bankruptcy in which
Raymark was a party.  In connection with its attempt to assert
control over Raymark and its assets, the creditors' committee,
joined by Raytech, the Guardian ad litem for Future Claimants, the
equity committee and the government agencies moved to have the venue
of the Raymark bankruptcies transferred from Utah to the Connecticut
Court.  In July 1998, the Bankruptcy Court issued an order on the
motions and transferred venue to the Connecticut Court.  In October
1998, a trustee was appointed by the United States Trustee over the
Raymark bankruptcies and is currently administering the Raymark
estate.

        In October, 1998 Raytech reached a tentative settlement
with its creditors and entered into a Memorandum of Understanding
with respect to achieving a consensual plan of reorganization (the
"Plan").  The parties to the settlement include Raytech, the
Official Creditors Committee, the Guardian ad litem for Future
Claimants, the Connecticut Department of Environmental Protection
and the U. S. Department of Justice, Environmental and Natural
Resources Division.  Substantive economic terms of the Memorandum of
Understanding provide for all general unsecured creditors including
but not limited to all asbestos and environmental claimants to
receive 90% of the equity in reorganized Raytech and any and all
refunds of taxes paid or net reductions in taxes owing resulting
from the transfer of equity to a trust established under the
Bankruptcy Code, and existing equity holders in Raytech to receive
10% of the equity in reorganized Raytech.  Substantive non-economic
terms of the Memorandum of Understanding provide for the parties to
jointly work to achieve a consensual Plan, to determine an
appropriate approach to related pension and employee benefit plans
and to cease activities that have generated adverse proceedings in
the Bankruptcy Court.  The parties have also agreed to jointly
request a finding in the confirmation order to the effect that while

<PAGE>
Raytech's liabilities appear to exceed the reasonable value of its
assets, the allocation of 10% of the equity to existing equity
holders is fair and equitable by virtue of the benefit to the estate
of resolving complicated issues without further costly and
burdensome litigation and the risks attendant therewith and the
economic benefits of emerging from bankruptcy without further delay.

        In August 1999, a bar date was set for filing claims
against Raytech by the Bankruptcy Court.  The Court appointed claims
agent reported in November 1999 that approximately 3200 claims were
filed as of the bar date.  Such claims were categorized into
asbestos personal injury, asbestos property damage, environmental,
including the EPA and State of Connecticut, pension/retiree benefits
and other employee related claims and other contractual and general
categories.  The total amounts claimed, not including unliquidated
claims, exceeded $300 billion.  Claims  believed invalid by the
debtor were objected to and the Bankruptcy Court expunged many
claims following hearings in February 2000.  All claims proven valid
will be dealt with through the plan of reorganization at
confirmation.

        By Bankruptcy Court order, the bar date referenced above
did not apply to asbestos-related personal injury ("Asbestos")
claimants although many filed claims pursuant to the terms of the
bar date.  In order to comply with the mandatory estimation of all
claims against the debtor in the confirmation process, Raytech, the
creditors' committee and the Government entered into discussions to
attempt to make estimations of the Asbestos and Government claims
not subject to the bar date.  The discussions resulted in an
agreement on the estimate of such Asbestos and Government claims,
and accordingly, a motion was filed in the Bankruptcy Court for an
allowance of Asbestos claims of $6.760 billion and Government claims
of $431.8 million for purposes of voting and distribution under the
terms of the Plan.  In March 2000, the Bankruptcy Court entered an
interim order allowing such amounts as general unsecured claims
subject to an objection period through June 2000 and the completion
of the initial vote of the plan of confirmation on July 7, 2000.  As
a result of the resolution of the objections raised with only a
slight modification to the plan and the overwhelming favorable
response to the initial vote, management was substantially certain
that the plan would be confirmed and that the estimate of the $7.2
billion of allowed claims would be finally approved by the
Bankruptcy Court.  Accordingly, during the second quarter, Raytech
recorded a charge and related liability in the accompanying
financial statements in the amount of the estimated amount of
allowed claims.  Such estimations are recorded as liabilities
subject to compromise since it is expected that the distributions
under the Plan with respect to such claims will be lesser amounts
consisting of a 90% equity distribution in reorganized Raytech at
confirmation pursuant to the Plan referenced above in this Note A.
Upon the effective date of the Plan, Raytech will utilize the "fresh
start" reporting principles contained in the AICPA's Statement of

<PAGE>
Position 90-7, which will result in adjustments  relating to the
amounts and classification of recorded assets and liabilities
determined as of the effective date.  Under the Plan, the ultimate
consideration to be received by all unsecured creditors will be
covered under the referenced 90% equity distribution and will be
substantially less than amounts shown in the accompanying financial
statements.

        In April 1999, separate adversary actions were filed in the
Bankruptcy Court by the retiree committee and the Pension Benefit
Guarantee Corporation, respectively, seeking judgments that retirees
and pensioners of Raymark have rights as claimants for their
benefits in the Raytech bankruptcy estate on the basis of successor
liability.  Both matters have been heard and decided by the
Bankruptcy Court in 1999.  In the retiree case, the Court ruled that
the Raymark Trustee had the right to terminate the welfare benefit
programs and accordingly that liability could not be transferred to
Raytech.  A motion for reconsideration was denied by the Court.  In
July 2000, the appellate court affirmed the Bankruptcy Court's
decision not to transfer the retiree liability to Raytech.  In the
pension case, the Court ruled that Raytech has the liability to pay
the Raymark pensions based on successor liability.  An appeal of the
decision was filed.  However, as a result of the adverse pension
case decision, Raytech has recorded during the second quarter a
charge and related liability in an estimated amount of $16 million
in the accompanying financial statements.  Such charged liability is
subject to compromise based on the pending appeal of the decision.

        In 1991, an environmental claim was filed by the
Pennsylvania Department of Environmental Resources ("DER") to
perform certain activities in connection with Raymark's Pennsylvania
manufacturing facility, including submission of an acceptable
closure plan for a landfill containing hazardous waste products
located at the facility.  In March 1991, the Company entered a
Consent Order which required Raymark to submit a revised closure
plan acceptable to the DER.  The estimated cost for Raymark to
comply with the order was $1.2 million.  The DER has notified the
Company that Raymark has failed to comply with its obligations under
the Consent Order.  In July 2000, Raymark has contracted to sell its
Pennsylvania manufacturing facility and the buyer has agreed to
comply with the order on behalf of Raymark.

        Pursuant to the Memorandum of Understanding, a consensual
plan of reorganization (the "Plan") has been prepared and filed in
the Bankruptcy Court in April 2000 along with the disclosure
statement with respect to the Plan.  Allowed claims under the Plan
fall into five classes, including priority, secured, general
unsecured, affiliate and shareholder.  Most allowed claims fall into
the general unsecured class and will be paid through the 90% equity

<PAGE>
contribution, including all asbestos-related claims, environmental
claims, employee-related claims and contractual and general claims.

        On August 31, 2000, the Bankruptcy Court entered an Order
Confirming Raytech Corporation's Second Amended Plan of
Reorganization (the "Plan").  The effective date of the plan, as
used in the Bankruptcy Code, shall not occur until the satisfaction
of certain conditions precedent (the "Effective Date").  On the
Effective Date, a channeling injunction ordered by the Bankruptcy
Court pursuant to Section 524(g) of the Bankruptcy Code will
permanently and forever stay, enjoin and restrain any asbestos-
related claims against Raytech, thereby channeling such claims to
the PI Trust for resolution.  On the Effective Date the rights
afforded and the treatment of all claims and equity interests in the
Plan shall be in exchange for and in complete satisfaction,
discharge and release of all claims and equity interests against
Raytech.  The Effective Date of the Confirmation Order is subject to
the following conditions precedent:  (a) The Bankruptcy Court and
United States District Court shall have entered an order or orders
establishing the asbestos personal injury permanent channeling
injunction and the claims trading injunction, (b) the enabling
agreement of the PI Trust is signed and in effect and (c) certain
favorable rulings have been obtained from the Internal Revenue
Service concerning the Plan or in lieu thereof opinions of counsel.
The date of fulfillment of the referenced conditions and the
Effective Date are unknown at this time.

        In April 1996, the Indiana Department of Environmental
Management ("IDEM") advised Raybestos Products Company ("RPC"), a
wholly-owned subsidiary of the Company, that it may have contributed
to the release of lead and PCB's (polychlorinated biphenyls) found
in small waterways near its Indiana facility.  In June 1996, IDEM
named RPC as a potentially responsible party ("PRP").  RPC notified
its insurers of the IDEM action and one insurer responded by filing
a complaint in January 1997 in the U.S. District Court, Southern
District of Indiana, captioned Reliance Insurance Company vs. RPC
seeking a declaratory judgment that any liability of RPC is excluded
from its policy with RPC.  In January 2000, the District Court
granted summary judgment to RPC, indicating that the insurer has a
duty to defend and indemnify losses stemming from the IDEM claim,
subject, however, to several remaining issues of coverage to be
decided.  In September 2000, the District Court resolved the issues
of coverage in the Company's favor, thereby instating the above-
referenced summary judgment.  RPC continues to assess the extent of
the contamination and its involvement and is currently negotiating
with IDEM for an agreed order of cleanup.  In April 2000, the United
States Environmental Protection Agency issued a subpoena for
information to determine compliance with federal environmental
regulations and in July proposed a consent order of environmental
response that is currently being considered by RPC. For any
liability not covered by insurance, the Company intends to offset
its investigation and cleanup costs against its notes payable to


<PAGE>
Raymark when such costs become known pursuant to the indemnification
clause in the wet clutch and brake acquisition agreement since it
appears that any source of contamination would have occurred during
Raymark's ownership of the Indiana facility.  Blood tests
administered to residents in the vicinity of the small waterways
revealed no exposure.

        In January 1997, Raytech was named through a subsidiary in
a third party complaint captioned Martin Dembinski, et al. vs.
Farrell Lines, Inc., et al. vs. American Stevedoring, Ltd., et al.
filed in the U.S. District Court for the Southern District of New
York for damages for asbestos-related disease.  The case has been
removed to the U.S. District Court, Eastern District of
Pennsylvania.  When required, the Company will seek an injunction in
the Bankruptcy Court to halt the litigation.

        In December 1998, a subsidiary of the Company filed a
complaint against a former administrative financial manager of
Advanced Friction Materials Company ("AFM") in the U.S. District
Court, Eastern District of Michigan, captioned Raytech Composites,
Inc. vs. Richard Hartwick, et ux. alleging that he wrongfully
converted Company monies in his control to his own use and benefit
in an amount greater than $3,300 prior to the April 1998 completion
of the acquisition of AFM as discussed in the following paragraph.
In December 1999, the District Court ruled on summary judgment in
favor of Raytech on its claim against Hartwick in the amount of
$3,330.  A constructive trust had been ordered by the Court
providing ownership to Raytech of four real estate properties
purchased by Hartwick with the converted funds.  The four properties
have been sold resulting in a net recovery of $1,337.  Hartwick has
been arrested by the State of Michigan under 13 counts of
embezzlement.  In May 2000, Hartwick pled guilty to the charges, and
has been sentenced for 2 to 15 years in the Michigan State
Penitentiary.

        In April 1998, AFM redeemed 53% of its stock from the
former owner for a formulated amount of $6,044, $3,022 paid at
closing and the balance of $3,022 payable by note in three equal
annual installments resulting in the Company attaining 100%
ownership of AFM.  In April 1999, an adversary proceeding was filed
in the Connecticut Bankruptcy Court against the former owner
captioned Raytech Corporation, et al. vs. Oscar E. Stefanutti, et
al. to recover $1,500 of the amount paid for the AFM stock and to
obtain a declaratory judgment that the balance of $3,022 is not owed
based upon the judgment that a fraud was perpetrated upon the
Company related to the Hartwick case referenced above.  In September
1999, the Bankruptcy Court granted jurisdiction of the case but
exercised discretionary abstention to enable the Court to focus on
issues impeding the plan confirmation.  In June 1999, the former
owner filed an action against the Company in a County Court in
Michigan captioned Oscar E. Stefanutti, et al. vs. Raytech
Automotive Components Company to enforce payment of the note.  An


<PAGE>
answer was filed and discovery has been completed.  A trial date has
been set for February 2001.

        In December 1998, the trustee of Raymark, Raytech and the
Raytech creditors' committee joined in filing an adversary
proceeding (complaint) against Craig R. Smith, et al. (including
relatives, business associates and controlled corporations) alleging
a systematic stripping of assets belonging to Raymark in an
elaborate and ongoing scheme perpetrated by the defendants.  The
alleged fraudulent scheme extended back to the 1980's and continued
up to this action and has enriched the Smith family by an estimated
$12 million and has greatly profited their associates, while
depriving Raymark and its creditors of nearly all of its assets
amounting to more than $27 million.  Upon motion of the plaintiffs,
the Bankruptcy Court issued a temporary restraining order stopping
Mr. Smith and all defendants from dissipating, conveying,
encumbering or otherwise disposing of any assets, which order has
been amended several times and remains in effect pending a
preliminary injunction hearing.  The reference to the Bankruptcy
Court has been withdrawn, and the matter is now being litigated in
the U.S. District Court in Connecticut.  A motion for summary
judgment was filed by the plaintiffs and was ruled upon in March
2000.  The ruling granted plaintiffs summary judgment on several of
the counts but denied summary judgment with respect to the claims
against Mr. Smith for the stripping of assets from Raymark and its
creditors for the reason that there was insufficient evidence of
insolvency of Raymark giving plaintiffs standing to file the claim.
The Court invited plaintiffs to file for reconsideration of the
denial with sufficient evidence of insolvency of Raymark at the time
Mr. Smith expropriated the assets.  Such motion for reconsideration
was filed in April 2000 and is pending.

        Costs incurred by the Company for asbestos related
liabilities are subject to indemnification by Raymark under the 1987
acquisition agreements.  By agreement, in the past, Raymark has
reimbursed the Company in part for such indemnified costs by payment
of the amounts due in Raytech common stock of equivalent value.
Under such agreement, Raytech received 926,821 shares in 1989,
177,570 shares in 1990, 163,303 in 1991 and 80,000 shares in 1993.
The Company's acceptance of its own stock was based upon an intent
to control dilution of its outstanding stock.  In 1992, the
indemnified costs were reimbursed by offsetting certain payments due
Raymark from the Company under the 1987 acquisition agreements.
Costs incurred in 1994, 1995, 1996, 1997, 1998, 1999 and 2000 were
applied as a reduction of the note obligations pursuant to the
agreements.

        The adverse ruling in the Third Circuit Court of Appeals,
of which a petition for writ of certiorari was denied by the U.S.
Supreme Court, precluding Raytech from relitigating the issue of its
successor liability leaves the U.S. District Court's (Oregon) 1988
ruling as the prevailing decision holding Raytech to be a successor

<PAGE>
to Raymark's asbestos-related liabilities.  This ruling has had a
material adverse impact on Raytech as it did not have the resources
needed to fund Raymark's potentially substantial uninsured asbestos-
related and environmental liabilities.  However, the Plan of
Reorganization has defined the impact of the successor liabilities
imposed by the referenced court decisions.  While the Plan of
Reorganization has been confirmed by the Bankruptcy Court and the
U.S. District Court, it is not yet effective subject to certain
conditions precedent, which timing cannot be predicted with
certainty.  The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern, which
contemplates continuity of operations, realization of assets and
liquidation of liabilities in the normal course of business.  The
uncertainties regarding the reorganization proceedings raise
substantial doubt about the Company's ability to continue as a going
concern.  The financial statements do not include any adjustments
relating to the recoverability, revaluation and classification of
recorded asset amounts that may be required in connection with
reorganizing under the Bankruptcy Code.


NOTE B - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

         In the opinion of management, the accompanying condensed
unaudited consolidated financial statements contain all adjustments
necessary to fairly present the financial position of Raytech as of
October 1, 2000, the results of operations for the thirteen and
thirty-nine weeks ended October 1, 2000 and October 3, 1999 and cash
flows for the thirty-nine weeks ended October 1, 2000 and October 3,
1999.  In addition to the normal and recurring adjustments, certain
adjustments reflecting charges to income and related liability
accounts have been recorded.  The adjustments are more fully
explained in Note A to the Consolidated Financial Statements above
and the Management's Discussion and Analysis of Financial Condition
and Results of Operations contained in that section of this Form 10-
Q.  The year-end condensed balance sheet data was derived from
audited financial statements but does not include all disclosures
required by generally accepted accounting principles.  The financial
statements contained herein should be read in conjunction with the
financial statements and related notes filed on Form 10-K for the
year ended January 2, 2000.



<PAGE>
NOTE C - INVENTORIES

        Net, inventories consist of the following:

                             October 1, 2000  January 2, 2000
         Raw material           $ 10,193         $ 10,883
         Work in process           8,751            9,177
         Finished goods           15,428           13,265

                                $ 34,372         $ 33,325


<PAGE>
NOTE D - EARNINGS PER SHARE
<TABLE>
<CAPTION>

                                    For the 13 Weeks Ended    For the 39 Weeks Ended
                                    Oct. 1,        Oct. 3,     Oct. 1,      Oct. 3,
                                     2000           1999        2000         1999
<S>            <C>    <S>        <C>     <C>     <C> <C>    <C>             <C>

Basic EPS Computation

Numerator:

  Net income (loss)              $     2,972     $ 3,378    $(7,056,036)    $13,205

Denominator:

  Common shares outstanding at
    beginning of year              3,480,904   3,421,395      3,480,904   3,421,395
  Stock options exercised             38,409      15,417         16,021       5,139
  Weighted average shares          3,519,313   3,436,812      3,496,925   3,426,534

Basic earnings (loss) per share  $       .84     $   .98    $ (2,017.78)    $  3.85


Diluted EPS Computation

Numerator:

  Net income (loss)              $     2,972     $ 3,378    $(7,056,036)    $13,205

Denominator:

  Common shares outstanding at
    beginning of year              3,480,904   3,421,395      3,480,904   3,421,395
  Stock options exercised             38,409      15,417         16,021       5,139
  Dilutive potential common shares    13,756     139,530            -        83,731

Adjusted weighted average shares   3,533,069   3,576,342      3,496,925   3,510,265

Diluted earnings (loss)
  per share                      $       .84     $   .94    $ (2,017.78)    $  3.76

Options to purchase 493,775 and 495,020 shares of common stock at $4.25 were
outstanding during the thirteen and thirty-nine week periods ended October 1, 2000.
Options to purchase 496,265 and 498,755 shares at $4.25 were outstanding during the
thirteen and thirty-nine week periods ended October 3, 1999.  The shares were not
included in the computation of diluted earnings per share because the options'
exercise price was greater than average market price of the common shares.

In addition, the dilutive potential common shares of 37,864 for the thirty-nine-week
period ended October 1, 2000 were not included in the computation of diluted
earnings per share because of their antidilutive effect.

See Note A regarding the potential dilutive effect of the Company's plan of
reorganization.
</TABLE>


<PAGE>
Note E - Segment Reporting


         The Company's operations are categorized into three business
segments based on management structure, product type and distribution
channel as described below.

        The Wet Friction operations produce specialty engineered
        products for heat resistant, inertia control, energy
        absorption and transmission applications.  The Company
        markets its products to automobile original equipment
        manufacturers, heavy duty original equipment manufacturers,
        as well as farm machinery, mining, truck and bus
        manufacturers.

        The Aftermarket segment produces specialty engineered
        products primarily for automobile and lift truck
        transmissions.  In addition to these products, this segment
        markets transmission filters and other transmission related
        components.  The focus of this segment is marketing to
        warehouse distributors and certain retail operations in the
        automotive aftermarket.

        The Dry Friction operations produce engineered friction
        products, primarily used in original equipment automobile and
        truck transmissions.  The clutch facings produced by this
        segment are marketed to companies who assemble the manual
        transmission systems used in automobiles and trucks.

Information relating to operations by industry segment follows with
related comments included in Management's Discussion and Analysis.


<PAGE>
NOTE E, continued


OPERATING SEGMENTS
<TABLE>
<CAPTION>

                                    For the 13 Weeks Ended    For the 39 Weeks Ended
                                       Oct. 1,     Oct. 3,      Oct. 1,      Oct. 3,
                                        2000        1999         2000         1999
<S>            <C>                   <C>  <C>     <C>       <C>             <C>

Wet Friction
Net sales to external customers      $  36,561    $ 38,458     $119,490     $121,360
Intersegment net sales (1)               2,890       4,638        9,462       10,807
Total net sales                      $  39,451    $ 43,096     $128,952     $132,167
Operating profit (2)                 $   4,042    $  4,033     $ 15,224     $ 13,904

Aftermarket
Net sales to external customers      $  13,829    $ 16,149     $ 43,817     $ 49,704
Intersegment net sales (1)                  12          11           20           16
Total net sales                      $  13,837    $ 16,160     $ 43,837     $ 49,720
Operating profit (2)                 $   2,720    $  2,751     $  7,965     $  8,598

Dry Friction
Net sales to external customers      $   6,365    $  7,866     $ 22,045     $ 24,585
Intersegment net sales (1)                 171         211          719          605
Total net sales                      $   6,536    $  8,077     $ 22,764     $ 25,190
Operating profit (2)                 $      79    $    132     $  1,016     $  1,134

Corporate

Operating loss before provision
  for asbestos litigation,
  environmental and other claims     $    (923)   $ (1,656)    $ (2,737)    $ (2,946)
Provision for asbestos litigation,
  environmental and other claims                       -     (7,207,750)        -
Operating loss (2,3)                 $    (923)   $ (1,656) $(7,210,487)    $ (2,946)

Total Segments
Net sales to external customers      $  56,755    $ 62,473     $185,352     $195,649
Intersegment net sales (1)               3,069       4,860       10,201       11,428
Total net sales                      $  59,824    $ 67,333     $195,553     $207,077

Consolidated operating profit
  (loss)                             $   5,918    $  5,260  $(7,186,282)    $ 20,690

<FN>
(1)  The Company records intersegment sales at an amount negotiated between the
     segments.  All intersegment sales are eliminated in consolidation.
(2)  The Company's management reviews the performance of its reportable segments
     on an operating profit basis, which consists of income before tax and minority
     interest.
(3)  Represents compensation and related costs for employees of the Company's corporate
     headquarters, professional fees, shareholder fees and public relations expenses;
     and includes a charge of $7.2 billion for liabilities subject to compromise (see
     Note A).
</TABLE>


<PAGE>
Note F - Income Taxes


        In the second quarter of 2000, the Company recorded a
deferred tax asset of $2.883 billion relating to the tax effects of
the liabilities subject to compromise.  Based on its historical
taxable income, the Company expects to realize approximately $140
million of the deferred tax asset through the ten-year carryback of
the previously paid taxes and the expected tax benefits during the
twenty-year carryforward period.  Accordingly, the Company has
recorded a valuation allowance of $2.743 billion against the deferred
tax asset to state it at its expected net realizable value.  If the
plan is confirmed and effectuated in 2000, and the liabilities subject
to compromise are settled for less than the recorded amount of allowed
claims, the net deferred tax asset will be adjusted accordingly at
that time.

        The Company's effective tax rate, excluding the deferred tax
benefit referred to above, for the thirty-nine-week period ended
October 1, 2000 was 42% compared to 29% for the same period in the
prior year.  The Company's effective tax rate for the thirteen-week
period ended October 1, 2000 was 42% compared to 29% for the same
period in the prior year.  In the prior period, the tax rate was
reduced by the effect of certain legal and other costs deducted for
tax purposes but offset for financial reporting purposes against the
principal balance of the Raymark note payable in connection with an
indemnification agreement with Raymark.  The offset against  the
principal balance of the Raymark note has been substantially utilized
and this tax benefit is no longer available.  This issue accounts for
substantially all of the increase in the effective tax rate.

        The Company has in process an Internal Revenue Service tax
audit for the 1996, 1997, and 1998 fiscal years.  The IRS has advised
the Company that it is reviewing the deductibility of certain
bankruptcy related costs, which are included in the indemnification
agreement with Raymark, based on a 1999 Bankruptcy Court ruling of an
unrelated taxpayer.  The amount and specific nature of costs that
could be contested has not been specified.  The Company has deducted
approximately $16.0 million of such costs through October 1, 2000 and
continues to believe that these costs are deductible.  At this time it
is not possible to assess the likelihood or amount of any IRS claim;
however, should the IRS assert a claim and prevail, an adjustment
related to prior year tax accruals would be required.



<PAGE>
Note G - Debt


        On September 28, 2000, Raybestos Products Company and
Raytech Automotive Components Company terminated their Loan and
Security Agreements with Bank of America and entered into a new Loan
and Security Agreement ("Agreement"), with Congress Financial
Corporation.  The new Agreement provides for Raybestos Products
Company, Raytech Automotive Components Company and Automotive
Composites Company to borrow up to $30 million in the aggregate.
The Agreement consists of $25 million revolving line of credit and a
term loan of $5 million.  The revolving line of credit is limited
through a formula which provides availability based on qualified
accounts receivable and inventory.  As of October 1, 2000, the
outstanding  balances from available lines of credit are $7.6
million, with $4.6 million available in additional borrowings.  The
loans bear interest of either 2.25% above the Adjusted Eurodollar
rate or prime rate, at the discretion of the borrower.  The loans
are collateralized by accounts receivable, inventory, machinery and
equipment and all other tangible and intangible assets of the
respective entities.  The Agreement includes certain covenant
restrictions, including restrictions on dividends payable to Raytech
Composites, Inc., a wholly-owned subsidiary of the Company.




<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS


    In preparing the discussion and analysis required by the
Federal Securities Laws, it is presumed that users of the interim
financial information have read or have access to the discussion and
analysis for the preceding fiscal year.

Results of Operations and Liquidity and Capital Resources

    Raytech Corporation worldwide net income for the thirteen-week
period ended October 1, 2000 was $3.0 million or $.84 per basic
share as compared to income of $3.4 million or $.98 per basic share
for the same period in 1999.  Raytech Corporation recorded a net
loss for the thirty-nine-week period ended October 1, 2000 of $7.056
billion or $(2,017.78) per basic share as compared to net income of
$13.2 million or $3.85 per basic share for the same period in the
prior year.  The Company recorded certain charges and related
liabilities, as discussed in more detail in Note A to the
Consolidated Financial Statements herein, based on the estimated
asbestos-related personal injury liability of  $6.760 billion and
the estimate of the Government's claim for certain environmental
liabilities of $431.8 million.  As part of the bankruptcy proceeding
with respect to successor liability, Raytech has recorded a charge
of $16 million to reflect its potential liability for funding the
Raymark pension plan.  The charges discussed were recorded as
"Liabilities Subject to Compromise" in accordance with the American
Institute of Certified Public Accounts Statement of Position 90-7,
"Financial Reporting by Entities in Reorganization Under the
Bankruptcy Code."

    The Plan, discussed in Note A to the Consolidated Financial
Statements herein, provides for the satisfaction and discharge of
the Company's pre-petition liabilities (Liabilities Subject to
Compromise) and upon the effective date of the Plan, will provide
the reorganized company with a capital structure appropriate for an
industrial products company.  A confirmation hearing with respect to
the Plan was held in late August 2000, and the Plan was confirmed at
that time.  However, the effective date of the Plan remains open.
When the Plan is confirmed and becomes effective, substantially all
the liabilities subject to compromise will be discharged in exchange
for 90% of stock of reorganized Raytech, while the current equity
holders will retain a 10% ownership position.  There are several
conditions and other matters that must be resolved in order to have
the Plan become effective.  Accordingly, it is difficult to predict
with certainty when it will become effective.

    Pretax income for the thirteen-week and thirty-nine-week
periods ended October 1, 2000, exclusive of the charges related to
the estimated claims of $7.2 billion, was $5.9 million and $21.5
million respectively.  The performance year-to-date reflects the


<PAGE>
improved operating efficiencies and reduced materials and labor cost
as an offset to the sales decline period-over-period.

Net Sales

    Worldwide net sales of $56.8 million and $185.4 million for the
thirteen-week and the thirty-nine-week periods ended October 1, 2000
were less than the recorded sales amounts of $62.5 million and
$195.6 million for the same periods in the prior year.  Sales were
below prior year in all segments for the third quarter and year-to-date.

    The Wet Friction segment recorded sales of $39.5 million for
the thirteen-week period ended October 1, 2000, a decline of $3.6
million from the prior year amount of $43.1.  The reduced sales in
the third quarter reflect a lower sales volume in the heavy duty
component of this segment, which was anticipated based on an
analysis of sales back orders.  The Wet Friction segment reported
sales of $129.0 million for the thirty-nine-week period ended
October 1, 2000 compared to $132.2 million in the same period for
1999.  The flat sales reflect the growth in sales of agricultural
products and slower sales in the on-road heavy product line.  The
automobile original equipment demand remains at 1999 record levels
for the thirty-nine-week period.

    Aftermarket sales for the quarter ended October 1, 2000 were
$13.8 million compared to $16.2 million in the prior year.  The $2.4
million decline in sales reflects slower sales of dry friction in
the North American market as well as the effects of a general
decline in the whole aftermarket industry.  Sales in the Aftermarket
segment of $43.8 million in the thirty-nine-week period ended
October 1, 2000 were $5.9 million less  than the recorded sales of
$49.7 million in the same period in the prior year.  The light
winter weather contributed to the lower sales as compared to 1999
results as well as more aggressive inventory management at certain
of our customers.

    Dry Friction segment sales were $6.5 million for its thirteen-
week period ended October 1, 2000, $1.6 million less than the prior
year amount of $8.1 million.  The reduced sales reflect both a
slower European economy and the currency translation adjustments.
The Dry Friction segment recorded sales of $22.8 million for the
nine-month period ended October 1, 2000, a $2.4 million decrease
from 1999 results.  The foreign exchange conversion rate decline in
2000, compared to 1999, accounted for a substantial portion of the
difference, as well as a slower sales economy for these products in
Europe.



<PAGE>
Operating Profits

    The following discussion of operating results by industry
segment relates to information contained in Note E - Segment
Reporting in the Notes to Condensed Consolidated Financial
Statements. Operating profit is income before income taxes and
minority interest.

    The Company recorded operating profits of $5.9 million for the
thirteen-week period ended October 1, 2000 as compared to $5.3
million of operating profit for the same period in the prior year.
Operating losses for the nine-month period ended October 1, 2000 of
$7.2 billion compare to operating profits during the same period in
1999 of $20.7 million.  The significant negative change in the
overall operating profit for the nine-month period is explained in
the beginning paragraph of the Management Discussion and Analysis
section.

    The Wet Friction segment recorded operating profit of $4.0
million for the thirteen-week period ended October 1, 2000, which
was breakeven as compared to the same period in 1999.  The Wet
Friction segment posted operating profits of $15.2 million as
compared to $13.9 million in 1999, an increase of $1.3 million or 9
percent for the nine-month period ended October 1, 2000.  The
improved earnings reflect improved operating efficiencies and
reduced materials costs over the prior year.  Substantially all of
the improved operating profits for the nine-month period can be
attributed to a successful turnaround program at the Sterling
Heights, Michigan, facility.  The successful program has provided
sufficient earnings to offset the impact of the weakened sales in
this segment and in fact for the entire Corporation.

    The Aftermarket segment recorded $2.7 million of operating
profit for the quarter ended October 1, 2000, which approximated the
1999 operating profit of $2.8 million for the same period in 1999.
The Aftermarket segment recorded operating profit for the thirty-
nine-week period ended October 1, 2000 of $8.0 million, a reduction
of $.6 million compared to 1999 results for the same period.  The
reduced operating profit reflects the impact of reduced sales,
compared period-to-period, of $5.9 million.  This segment did reduce
the impact of the lower sales through reduction of labor costs and
material costs.

    The Dry Friction segment recorded a $.1 million operating
profit for the thirteen-week period ended October 1, 2000 and
October 3, 1999, respectively.  The operating profit was driven by
reductions in employee-related expenses and other overhead expenses
partially offset by currency translation and under absorption of
certain manufacturing costs during the quarter.  The Dry Friction
segment recorded operating profit for the thirty-nine-week period
ended October 1, 2000 of $1.0 million reflecting a decrease of $.1
million over 1999 results for the same period.  The reduced


<PAGE>
operating profits were due to reduced sales period-over-period of
$2.4 million.

Income Taxes

    In the second quarter of 2000, the Company recorded a deferred
tax asset of $2.883 billion relating to the tax effects of the
liabilities subject to compromise.  Based on its historical taxable
income, the Company expects to realize approximately $140 million of
the deferred tax asset through the ten-year carryback of the
previously paid taxes and the expected tax benefits during the
twenty-year carryforward period.  Accordingly, the Company has
recorded a valuation allowance of $2.743 billion against the
deferred tax asset to state it at its expected net realizable value.
If the plan becomes effective in 2000, and the liabilities subject
to compromise are settled for less than the recorded amount of
allowed claims, the net deferred tax asset will be adjusted
accordingly at that time.

    The Company's effective tax rate, excluding the deferred tax
benefit referred to above, for the thirty-nine-week periods ended
October 1, 2000 was 42% compared to 29% for the same in the prior
year.  The Company's effective tax rate for the thirteen-week period
ended October 1, 2000 was 42% compared to 29% for the same period in
the prior year.  In the prior periods, the tax rate was reduced by
the effect of certain legal and other costs deducted for tax
purposes but offset for financial reporting purposes against the
principal balance of the Raymark note payable in connection with an
indemnification agreement with Raymark.  The offset against  the
principal balance of the Raymark note has been substantially
utilized and this tax benefit is no longer available.  These issues
account for substantially all of the increase in the effective tax
rates.

    The Company has in process an Internal Revenue Service tax
audit for the 1996, 1997, and 1998 fiscal years.  The IRS has
advised the Company that it is reviewing the deductibility of
certain bankruptcy related costs, which are included in the
indemnification agreement with Raymark, based on a 1999 Bankruptcy
Court ruling of an unrelated taxpayer.  The amount and specific
nature of costs that could be contested has not been specified.  The
Company has deducted approximately $16.0 million of such costs
through October 1, 2000 and continues to believe that these costs
are deductible.  At this time it is not possible to assess the
likelihood or amount of any IRS claim; however, should the IRS
assert a claim and prevail, an adjustment related to prior year tax
accruals would be required.



<PAGE>
Outlook

    The statements continued in this Outlook section are based on
management's current expectations.  With the exception of the
historical information contained herein, the statements presented in
this Outlook section are forward-looking statements that involve
numerous risks and uncertainties.  Actual results may differ
materially.

    The Company expects to continue to face an increasingly
competitive automotive environment and a steady state for the demand
in certain agricultural machine products.  Our major customers in
the automotive industry face an increased competitive automotive
environment which is likely to continue to limit Raytech's pricing
flexibility in the near term.  Although there are indications the
Asian economies have begun to stabilize, the Asian economic
difficulties could have an unfavorable effect on overall economic
conditions in the U. S. and Canada, where our major customers' sales
are concentrated.

    With regard to the Company's agricultural equipment operations,
worldwide farm commodity prices remain at low levels. In spite of
these conditions, it is expected that retail demand for agricultural
equipment will be higher than 1999 levels.  The Company expects
demand for certain heavy duty products will be reduced through the
remainder of 2000 based on a review of its current order bank.  In
light of this outlook and the Company's continuing commitment to
aggressive asset management, production schedules are being reviewed
for 2000 to ensure the Company's production meets demand.

    The Aftermarket segment sales, which were at record highs in
1999, are expected to decline compared to 1999 levels.  The demand
for aftermarket transmission products has been slowed by generally
mild weather in many parts of the country and more aggressive
inventory management by certain customers.

    The Dry Friction segment continues to operate in a sluggish
European environment with unemployment remaining at high levels and
economic growth improving only marginally.  Sales are expected to be
near 1999 levels in terms of functional currency, with lower sales
reported due to translation adjustment.  The development of new
market opportunities in Asia is supported through the new production
facility in China.  The overall Asian economy continues to be
negatively affected by the weakened economies of Japan and other
Asian countries.

    The Company's outlook for 2000 worldwide sales and revenue
anticipates sales and revenues to be lower than 1999.


<PAGE>
Financial Risks

    The Company is naturally exposed to various interest rate risk
and foreign currency risk in its normal course of business.

    The rates of interest on the various debt agreements range from
3% to 11%.  The Company has not entered into any interest rate
management programs such as interest rate swaps or other derivative
type transactions.  The amount of exposure which could be created by
increases in rates is not considered significant by management.

Liquidity and Capital Resources

    The Company's cash and cash equivalents totaled $10.9 million
at October 1, 2000 compared to $10.7 million at January 2, 2000.
Capital investment for the nine-month period totaled $9.4 million.
The level of capital investment is consistent with planned
expenditures in both periods.

    The Company uses collateralized lines of credit for funding
purposes in the United States.  As more fully explained in Note G -
Debt, the Company entered into a new Loan and Security Agreement
with Congress Financial Corporation and terminated its Loan and
Security Agreement with Bank of America.  As of October 1, 2000, the
outstanding  balances from available lines of credit are $7.6
million, with $4.6 million available in additional borrowings.  The
Company's foreign subsidiaries have outstanding balances from
available lines of credit amounting to $4.0 million with available
unused lines of credit amounting to $.8 million, which expire upon
demand. The Company believes that cash provided by operations will
provide sufficient liquidity to meet its funding requirements.

Safe Harbor Statement

    Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995:  Statements under the "Outlook" heading above and
other statements herein that relate to future operating periods are
subject to important risks and uncertainties that could cause actual
results to differ materially.  Forward-looking statements relating to
the Company's businesses involve certain factors that are subject to
change, including the many interrelated factors that determine consumer
confidence, including worldwide demand for automotive and heavy duty
products, general economic conditions, the environment, actions of
competitors in the various industries in which the Company competes;
production difficulties, including capacity and supply constraints;
dealer practices; labor relations; interest and currency exchange rates
(including the effect of conversion to and from the euro);
technological difficulties; accounting standards, and other risks and
uncertainties.  Further information, including factors that potentially
could materially affect the Company's financial results, is included in
the Company's filings with the Securities and Exchange Commission.


<PAGE>
Recently Issued Accounting Pronouncement

    In June 1999, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 137,
Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133 - an
Amendment of FASB Statement No. 133.  This statement defers, for one
year, the effective date of SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, to those fiscal years beginning
after June 15, 2000.  SFAS No. 133 requires all derivatives to be
recorded as either assets or liabilities and the instruments to be
measured at fair value.  Gains or losses resulting from changes in the
values of those derivatives are to be recognized immediately or
deferred depending on the use of the derivative and whether or not it
qualified as a hedge.  Raytech will adopt SFAS No. 133 by January 1,
2001, as required.  The Company has not entered into any interest rate
management programs such as interest rate swaps or other derivative
type transactions.  Further, management has conducted a review of the
Company's various purchase agreements, and the results of this review
indicate that the adoption of SFAS No. 133 will not have a material
impact on the financial statements of Raytech Corporation for the year
2000.

    In December 1999, the Securities and Exchange Commission issued
Staff Accounting Bulletin (SAB) No. 101, Revenue Recognition in
Financial Statements.  The implementation date for this SAB has been
delayed until the fourth quarter of 2000 (SAB101B).  Management has
reviewed the guidance set forth in SAB101 and has determined that the
revenue recognition policies of the Corporation comply with both
generally accepted accounting principles (GAAP) and the SEC guidance.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

         See Item 2.



<PAGE>
                   PART II. OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

         The formation of Raytech and the implementation of the
restructuring plan more fully described in Item 1 above was for
the purpose of providing a means to acquire and operate
businesses in a corporate structure that would not be subject to
any asbestos-related or other liabilities of Raymark.

        Prior to the formation of Raytech, Raymark had been
named as a defendant in more than 88,000 lawsuits claiming
substantial damages for injury or death from exposure to airborne
asbestos fibers.  Subsequent to the divestiture sale of Raymark
in 1988,  lawsuits continued to be filed against Raymark at the
rate of approximately 1,000 per month until an involuntary
petition in bankruptcy was filed against Raymark in February
1989, which stayed all its litigation.  In August 1996, the
involuntary petition filed against Raymark was dismissed
following a trial and the stay was lifted.  However, in March
1998, Raymark filed a voluntary bankruptcy petition again staying
the litigation.

        In accordance with the restructuring plan, Raytech
purchased the Wet Clutch and Brake Division and German subsidiary
in 1987 from its then wholly-owned subsidiary, Raymark.  Each
such acquisition was financed through borrowed funds from new
lenders  and Raytech stock and notes.  Pursuant to these
acquisitions, Raymark agreed to indemnify Raytech for any future
liabilities and costs that may result from asbestos litigation.
Management believed that each purchase by Raytech from Raymark
complied with Raytech's restructuring plan principles of (i)
paying fair market value, (ii) acquiring businesses that did not
give rise to any asbestos-related or other claims against
Raymark, (iii) permitting Raymark to retain the proceeds for its
ongoing business and creditors, (iv) entering the transactions in
good faith and not to hinder, delay or defraud creditors, and (v)
conducting its affairs independent of Raymark.

        In May 1988, following shareholder approval, Raytech
sold all of the Raymark stock to Asbestos Litigation Management,
Inc., thereby divesting itself of Raymark.  The purchase price of
the stock was affected by Raymark's substantial asbestos-related
liabilities.

        Despite the restructuring plan implementation and
subsequent divestiture of Raymark, Raytech was named a co-
defendant with Raymark and other named defendants in
approximately 3,300 asbestos-related lawsuits as a successor in
liability to Raymark.  Until February 1989, the defense of all
such lawsuits was provided to Raytech by Raymark in accordance
with the indemnification agreement included as a condition of the

<PAGE>
purchase of the Wet Clutch and Brake Division and German
subsidiary from Raymark in 1987.  However, subsequent to the
involuntary bankruptcy proceedings against Raymark, a restrictive
insurance funding order was issued by an Illinois Court, denying
defense costs, and another Raymark insurance carrier had been
declared insolvent.  These circumstances caused Raymark to be
unable to fund the costs of defense to Raytech in the asbestos-
related lawsuits referenced above. Raytech management was
informed that Raymark's cost of defense and disposition of cases
up to the automatic stay of litigation in 1989 under the
involuntary bankruptcy proceedings was approximately $333 million
of Raymark's total insurance coverage of approximately $395
million.  It has also been informed that as a result of the
dismissal of the involuntary petition, Raymark encountered newly
filed asbestos-related lawsuits but had received $27 million from
a state guarantee association to make up the insurance policies
of the insolvent carrier and had $32 million in other policies to
defend against such litigation.  In March 1998, Raymark filed a
voluntary bankruptcy petition as a result of several large
asbestos-related judgments.

        In an asbestos-related personal injury case decided in
October 1988 in a U.S. District Court in Oregon, Raytech was
ruled under Oregon equity law to be a successor to Raymark's
asbestos-related liability.  The successor ruling was appealed by
Raytech and in October 1992 the Ninth Circuit Court of Appeals
affirmed the District Court's judgment on the grounds stated in
the District Court's opinion.  The effect of this decision
extends beyond the Oregon District due to a Third Circuit Court
of Appeals decision in a related case cited below wherein Raytech
was collaterally estopped (precluded) from relitigating the issue
of its successor liability for Raymark's asbestos-related
liabilities.

        As the result of the inability of Raymark to fund
Raytech's costs of defense recited above, and in order to obtain
a ruling binding across all jurisdictions as to whether Raytech
is liable as a successor for asbestos-related and other claims,
including claims yet to be filed relating to the operations of
Raymark or its predecessors, on March 10, 1989, Raytech filed a
petition seeking relief under Chapter 11 of Title 11, United
States Code in the United States Bankruptcy Court, District of
Connecticut.  Under Chapter 11, substantially all litigation
against Raytech has been stayed while the debtor corporation and
its non-filed operating subsidiaries continue to operate their
businesses in the ordinary course under the same management and
without disruption to employees, customers or suppliers.  In the
Bankruptcy Court a creditors' committee was appointed, comprised
primarily of asbestos claimants' attorneys.  In August 1995, an
official committee of equity security holders was appointed
relating to a determination of equity security holders' interest
in the estate.


<PAGE>
        In June 1989 Raytech filed a class action in the
Bankruptcy Court against all present and future asbestos
claimants seeking a declaratory judgment that it not be held
liable for the asbestos-related liabilities of Raymark.  It was
the intent of Raytech to have this case heard in the U.S.
District Court, and since the authority of the Bankruptcy Court
is referred from the U.S. District Court, upon its motion and
argument the U.S. District Court withdrew its reference of the
case to the Bankruptcy Court and thereby agreed to hear and
decide the case.  In September 1991, the U.S. District Court
issued a ruling dismissing one count of the class action citing
as a reason the preclusive effect of the 1988 Oregon case,
previously discussed, under the doctrine of collateral estoppel
(conclusiveness of judgment in a prior action), in which Raytech
was ruled to be a successor to Raymark's asbestos liability under
Oregon law.  The remaining counts before the U.S. District Court
involve the transfer of Raymark's asbestos-related liabilities to
Raytech on the legal theories of alter-ego and fraudulent
conveyance.  Upon a motion for reconsideration, the U.S. District
Court affirmed its prior ruling in February 1992.  Also, in
February 1992, the U.S. District Court transferred the case in
its entirety to the U.S. District Court for the Eastern District
of Pennsylvania.  Such transfer was made by the U.S. District
Court without motion from any party in the interest of the
administration of justice as stated by the U.S. District Court.
In December 1992, Raytech filed a motion to activate the case and
to obtain rulings on the remaining counts which was denied by the
U.S. District Court.  In October 1993, the creditors' committee
asked the Court to certify the previous dismissal of the
successor liability count.  In February 1994, the U.S. District
Court granted the motion to certify and the successor liability
dismissal was accordingly appealed.  In May 1995, the Third
Circuit Court of Appeals ruled that Raytech is collaterally
estopped (precluded) from relitigating the issue of its successor
liability as ruled in the 1988 Oregon case recited above,
affirming the U.S. District Court's ruling of dismissal.  A
petition for a writ of certiorari was denied by the U.S. Supreme
Court in October 1995.  The ruling leaves the Oregon case, as
affirmed by the Ninth Circuit Court of Appeals, as the prevailing
decision holding Raytech to be a successor to Raymark's asbestos-
related liabilities.

        As the result of the Court rulings recited above holding
Raytech a successor to Raymark's asbestos-related liabilities,
Raytech halted payments to Raymark under the 1987 Asset Purchase
Agreement in May 1995.  However, in February 1997, with Raymark
temporarily out of bankruptcy, Raytech resumed making payments
pursuant to the Agreement.  As the result of the creditors'
committee's action to halt the payments, the Bankruptcy Court
ordered the payments stopped in January 1998.  In retaliation in
December 1997, Raymark commenced 33 separate lawsuits against
Raytech subsidiaries in various jurisdictions from New York to
California ("Raymark Litigation") demanding payment or the return

<PAGE>
of assets for breach of contract.  Raytech filed an adversary
proceeding complaint to halt the Raymark litigation and was
granted a temporary restraining order in December 1997 by the
Bankruptcy Court that remains in effect.  The creditors'
committee intervened in the action in support of the restraining
order.

        In March and April 1998, Raymark and its parent, Raymark
Corporation, filed voluntary petitions in bankruptcy in a Utah
Court which stayed all litigation in the Raytech bankruptcy in
which Raymark was a party.  In connection with its attempt to
assert control over Raymark and its assets, the creditors'
committee, joined by Raytech, the Guardian ad litem for Future
Claimants, the equity committee and the government agencies moved
to have the venue of the Raymark bankruptcies transferred from
Utah to the Connecticut Court.  In July 1998, the Bankruptcy
Court issued an order on the motions and transferred venue to the
Connecticut Court.  In October 1998, a trustee was appointed by
the United States Trustee over the Raymark bankruptcies and is
currently administering the Raymark estate.

        In October, 1998 Raytech reached a tentative settlement
with its creditors and entered into a Memorandum of Understanding
with respect to achieving a consensual plan of reorganization
(the "Plan").  The parties to the settlement include Raytech, the
Official Creditors Committee, the Guardian ad litem for Future
Claimants, the Connecticut Department of Environmental Protection
and the U. S. Department of Justice, Environmental and Natural
Resources Division.  Substantive economic terms of the Memorandum
of Understanding provide for all general unsecured creditors
including but not limited to all asbestos and environmental
claimants to receive 90% of the equity in reorganized Raytech and
any and all refunds of taxes paid or net reductions in taxes
owing resulting from the transfer of equity to a trust
established under the Bankruptcy Code, and existing equity
holders in Raytech to receive 10% of the equity in reorganized
Raytech.  Substantive non-economic terms of the Memorandum of
Understanding provide for the parties to jointly work to achieve
a consensual Plan, to determine an appropriate approach to
related pension and employee benefit plans and to cease
activities that have generated adverse proceedings in the
Bankruptcy Court.  The parties have also agreed to jointly
request a finding in the confirmation order to the effect that
while Raytech's liabilities appear to exceed the reasonable value
of its assets, the allocation of 10% of the equity to existing
equity holders is fair and equitable by virtue of the benefit to
the estate of resolving complicated issues without further costly
and burdensome litigation and the risks attendant therewith and
the economic benefits of emerging from bankruptcy without further
delay.

        In August 1999, a bar date was set for filing claims
against Raytech by the Bankruptcy Court.  The Court appointed

<PAGE>
claims agent reported in November 1999 that approximately 3200
claims were filed as of the bar date.  Such claims were
categorized into asbestos personal injury, asbestos property
damage, environmental, including the EPA and State of
Connecticut, pension/retiree benefits and other employee-related
claims and other contractual and general categories.  The total
amounts claimed, not including unliquidated claims, exceeded $300
billion.  Claims believed invalid by the debtor were being
objected to and the Bankruptcy Court expunged many claims
following hearings in February 2000.  All claims proven valid
will be dealt with through the plan of reorganization at
confirmation.

        By Bankruptcy Court order, the bar date referenced above
did not apply to asbestos-related personal injury ("Asbestos")
claimants although many filed claims pursuant to the terms of the
bar date.  In order to comply with the mandatory estimation of
all claims against the debtor in the confirmation process,
Raytech, the creditors' committee and the Government entered into
discussions to attempt to make estimations of the Asbestos and
Government claims not subject to the bar date.  The discussions
resulted in an agreement on the estimate of such Asbestos and
Government claims, and accordingly, a motion was filed in the
Bankruptcy Court for an allowance of Asbestos claims of $6.760
billion and Government claims of $431.8 million for purposes of
voting and distribution under the terms of the Plan.  In March
2000, the Bankruptcy Court entered an interim order allowing such
amounts as general unsecured claims subject to an objection
period through June 2000 and the completion of the initial vote
of the plan of confirmation on July 7, 2000.  As a result of the
resolution of the objections raised with only a slight
modification to the plan and the overwhelming favorable response
to the initial vote, management was substantially certain that
the plan would be confirmed and that the estimate of the $7.2
billion of allowed claims would be finally approved by the
Bankruptcy Court.   Accordingly, during the second quarter,
Raytech recorded a charge and related liability in the
accompanying financial statements in the amount of the estimated
amount of allowed claims.  Such estimations are recorded as
liabilities subject to compromise since it is expected that the
distributions under the Plan with respect to such claims will be
lesser amounts consisting of a 90% equity distribution in
reorganized Raytech at confirmation pursuant to the Plan
referenced above in this Note A.  Upon the effective date of the
Plan, Raytech will utilize the "fresh start" reporting principles
contained in the AICPA's Statement of Position 90-7, which will
result in adjustments relating to the amounts and classification
of recorded assets and liabilities determined as of the effective
date.  Under the Plan, the ultimate consideration to be received
by all unsecured creditors will be covered under the referenced
90% equity distribution and will be substantially less than
amounts shown in the accompanying financial statements.


<PAGE>
        In April 1999, separate adversary actions were filed in
the Bankruptcy Court by the retiree committee and the Pension
Benefit Guarantee Corporation, respectively, seeking judgments
that retirees and pensioners of Raymark have rights as claimants
for their benefits in the Raytech bankruptcy estate on the basis
of successor liability.  Both matters have been heard and decided
by the Bankruptcy Court in 1999.  In the retiree case, the Court
ruled that the Raymark Trustee had the right to terminate the
welfare benefit programs and accordingly that liability could not
be transferred to Raytech.  A motion for reconsideration was
denied by the Court.  In July 2000, the appellate court affirmed
the Bankruptcy Court's decision not to transfer the retiree
liability to Raytech.  In the pension case, the Court ruled that
Raytech has the liability to pay the Raymark pensions based on
successor liability.  An appeal of the decision was filed.
However, as a result of the adverse pension case decision,
Raytech has recorded during the second quarter a charge and
related liability in an estimated amount of $16 million in the
accompanying financial statements.  Such charged liability is
subject to compromise based on the pending appeal of the
decision.

        In 1991, an environmental claim was filed by the
Pennsylvania Department of Environmental Resources ("DER") to
perform certain activities in connection with Raymark's
Pennsylvania manufacturing facility, including submission of an
acceptable closure plan for a landfill containing hazardous waste
products located at the facility.  In March 1991, the Company
entered a Consent Order which required Raymark to submit a
revised closure plan acceptable to the DER.  The estimated cost
for Raymark to comply with the order was $1.2 million.  The DER
has notified the Company that Raymark has failed to comply with
its obligations under the Consent Order.  In July 2000 Raymark
has contracted to sell its Pennsylvania manufacturing facility
and the buyer has agreed to comply with the order on behalf of
Raymark.

        Pursuant to the Memorandum of Understanding, a
consensual plan of reorganization (the "Plan") has been prepared
and filed in the Bankruptcy Court in April 2000 along with the
disclosure statement with respect to the Plan.  Allowed claims
under the Plan fall into five classes, including priority,
secured, general unsecured, affiliate and shareholder.  Most
allowed claims fall into the general unsecured class and will be
paid through the 90% equity contribution, including all asbestos-
related claims, environmental claims, employee-related claims and
contractual and general claims.

        On August 31, 2000, the Bankruptcy Court entered an
Order Confirming Raytech Corporation's Second Amended Plan of
Reorganization (the "Plan").  The effective date of the plan, as
used in the Bankruptcy Code, shall not occur until the
satisfaction of certain conditions precedent (the "Effective

<PAGE>
Date").  On the Effective Date, a channeling injunction ordered
by the Bankruptcy Court pursuant to Section 524(g) of the
Bankruptcy Code will permanently and forever stay, enjoin and
restrain any asbestos-related claims against Raytech, thereby
channeling such claims to the PI Trust for resolution.  On the
Effective Date the rights afforded and the treatment of all
claims and equity interests in the Plan shall be in exchange for
and in complete satisfaction, discharge and release of all claims
and equity interests against Raytech.  The Effective Date of the
Confirmation Order is subject to the following conditions
precedent:  (a) The Bankruptcy Court and United States District
Court shall have entered an order or orders establishing the
asbestos personal injury permanent channeling injunction and the
claims trading injunction, (b) the enabling agreement of the PI
Trust is signed and in effect and (c) certain favorable rulings
have been obtained from the Internal Revenue Service concerning
the Plan or in lieu thereof opinions of counsel.  The date of
fulfillment of the referenced conditions and the Effective Date
are unknown at this time.


        In April 1996, the Indiana Department of Environmental
Management ("IDEM") advised Raybestos Products Company ("RPC"), a
wholly-owned subsidiary of the Company, that it may have
contributed to the release of lead and PCB's (polychlorinated
biphenyls) found in small waterways near its Indiana facility.
In June 1996, IDEM named RPC as a potentially responsible party
("PRP").  RPC notified its insurers of the IDEM action and one
insurer responded by filing a complaint in January 1997 in the
U.S. District Court, Southern District of Indiana, captioned
Reliance Insurance Company vs. RPC seeking a declaratory judgment
that any liability of RPC is excluded from its policy with RPC.
In January 2000, the District Court granted summary judgment to
RPC, indicating that the insurer has a duty to defend and
indemnify losses stemming from the IDEM claim, subject, however,
to several remaining issues of coverage to be decided.  In
September 2000, the District Court resolved the issues of
coverage in the Company's favor, thereby instating the above-
referenced summary judgment.  RPC continues to assess the extent
of the contamination and its involvement and is currently
negotiating with IDEM for an agreed order of cleanup.  In April
2000, the United States Environmental Protection Agency issued a
subpoena for information to determine compliance with federal
environmental regulations and in July proposed a consent order of
environmental response that is currently being considered by RPC.
For any liability not covered by insurance, the Company intends
to offset its investigation and cleanup costs against its notes
payable to Raymark when such costs become known pursuant to the
indemnification clause in the wet clutch and brake acquisition
agreement since it appears that any source of contamination would
have occurred during Raymark's ownership of the Indiana facility.
Blood tests administered to residents in the vicinity of the
small waterways revealed no exposure.


<PAGE>
       In January 1997, Raytech was named through a subsidiary
in a third party complaint captioned Martin Dembinski, et al. vs.
Farrell Lines, Inc., et al. vs. American Stevedoring, Ltd., et
al. filed in the U.S. District Court for the Southern District of
New York for damages for asbestos-related disease.  The case has
been removed to the U.S. District Court, Eastern District of
Pennsylvania.  When required, the Company will seek an injunction
in the Bankruptcy Court to halt the litigation.

        In December 1998, a subsidiary of the Company filed a
complaint against a former administrative financial manager of
Advanced Friction Materials Company ("AFM") in the U.S. District
Court, Eastern District of Michigan, captioned Raytech
Composites, Inc. vs. Richard Hartwick, et ux. alleging that he
wrongfully converted Company monies in his control to his own use
and benefit in an amount greater than $3,300 prior to the April
1998 completion of the acquisition of AFM as discussed in the
following paragraph.  In December 1999, the District Court ruled
on summary judgment in favor of Raytech on its claim against
Hartwick in the amount of $3,330.  A constructive trust had been
ordered by the Court providing ownership to Raytech of four real
estate properties purchased by Hartwick with the converted funds.
The four properties have been sold resulting in a net recovery of
$1,337.  Hartwick has been arrested by the State of Michigan
under 13 counts of embezzlement.  In May 2000, Hartwick pled
guilty to the charges and has been sentenced for 2 to 15 years in
the Michigan State Penitentiary.

        In April 1998, AFM redeemed 53% of its stock from the
former owner for a formulated amount of $6,044, $3,022 paid at
closing and the balance of $3,022 payable by note in three equal
annual installments resulting in the Company attaining 100%
ownership of AFM.  In April 1999, an adversary proceeding was
filed in the Connecticut Bankruptcy Court against the former
owner captioned Raytech Corporation, et al. vs. Oscar E.
Stefanutti, et al. to recover $1,500 of the amount paid for the
AFM stock and to obtain a declaratory judgment that the balance
of $3,022 is not owed based upon the judgment that a fraud was
perpetrated upon the Company related to the Hartwick case
referenced above.  In September 1999, the Bankruptcy Court
granted jurisdiction of the case but exercised discretionary
abstention to enable the Court to focus on issues impeding the
plan confirmation.  In June 1999, the former owner filed an
action against the Company in a County Court in Michigan
captioned Oscar E. Stefanutti, et al. vs. Raytech Automotive
Components Company to enforce payment of the note.  An answer was
filed and discovery has been completed.  A trial date has been
set for February 2001.

        In December 1998, the trustee of Raymark, Raytech and
the Raytech creditors' committee joined in filing an adversary
proceeding (complaint) against Craig R. Smith, et al. (including

<PAGE>
relatives, business associates and controlled corporations)
alleging a systematic stripping of assets belonging to Raymark in
an elaborate and ongoing scheme perpetrated by the defendants.
The alleged fraudulent scheme extended back to the 1980's and
continued up to this action and has enriched the Smith family by
an estimated $12 million and has greatly profited their
associates, while depriving Raymark and its creditors of nearly
all of its assets amounting to more than $27 million.  Upon
motion of the plaintiffs, the Bankruptcy Court issued a temporary
restraining order stopping Mr. Smith and all defendants from
dissipating, conveying, encumbering or otherwise disposing of any
assets, which order has been amended several times and remains in
effect pending a preliminary injunction hearing.  The reference
to the Bankruptcy Court has been withdrawn, and the matter is now
being litigated in the U.S. District Court in Connecticut.  A
motion for summary judgment was filed by the plaintiffs and was
ruled upon in March 2000.  The ruling granted plaintiffs summary
judgment on several of the counts but denied summary judgment
with respect to the claims against Mr. Smith for the stripping of
assets from Raymark and its creditors for the reason that there
was insufficient evidence of insolvency of Raymark, giving
plaintiffs standing to file the claim.  The Court invited
plaintiffs to file for reconsideration of the denial with
sufficient evidence of insolvency of Raymark at the time Mr.
Smith expropriated the assets.  Such motion for reconsideration
was filed in April 2000 and is pending.

        Costs incurred by the Company for asbestos related
liabilities are subject to indemnification by Raymark under the
1987 acquisition agreements.  By agreement, in the past, Raymark
has reimbursed the Company in part for such indemnified costs by
payment of the amounts due in Raytech common stock of equivalent
value.  Under such agreement, Raytech received 926,821 shares in
1989, 177,570 shares in 1990, 163,303 in 1991 and 80,000 shares
in 1993.  The Company's acceptance of its own stock was based
upon an intent to control dilution of its outstanding stock.  In
1992, the indemnified costs were reimbursed by offsetting certain
payments due Raymark from the Company under the 1987 acquisition
agreements.  Costs incurred in 1994, 1995, 1996, 1997, 1998, 1999
and 2000 were applied as a reduction of the note obligations
pursuant to the agreements.

        The adverse ruling in the Third Circuit Court of
Appeals, of which a petition for writ of certiorari was denied by
the U.S. Supreme Court, precluding Raytech from relitigating the
issue of its successor liability leaves the U.S. District Court's
(Oregon) 1988 ruling as the prevailing decision holding Raytech
to be a successor to Raymark's asbestos-related liabilities.
This ruling has had a material adverse impact on Raytech as it
did not have the resources needed to fund Raymark's potentially
substantial uninsured asbestos-related and environmental
liabilities.  However, the Plan of Reorganization has defined the
impact of the successor liabilities imposed by the referenced

<PAGE>
court decisions.  While the Plan of Reorganization has been
confirmed by the Bankruptcy Court and the U.S. District Court, it
is not yet effective subject to certain conditions precedent,
which timing cannot be predicted with certainty.  The
accompanying financial statements have been prepared assuming
that the Company will continue as a going concern, which
contemplates continuity of operations, realization of assets and
liquidation of liabilities in the normal course of business.  The
uncertainties regarding the reorganization proceedings raise
substantial doubt about the Company's ability to continue as a
going concern.  The financial statements do not include any
adjustments relating to the recoverability, revaluation and
classification of recorded asset amounts that may be required in
connection with reorganizing under the Bankruptcy Code.


<PAGE>
Item 4.  Submission of Matters to a Vote of Security Holders.

       The Annual Shareholders' Meeting of Raytech was held
July 21, 2000. The matters submitted to stockholder vote and the
vote count on each matter were as follows:

       1.  Proposal to elect three Class II Directors for full
           three-year terms and until their respective successors are
           elected:

           For Albert A. Canosa               Withheld
              3,284,744                        25,682

           For Robert M. Gordon               Withheld
                3,282,585                      27,841

           For Frederick J. Mancheski         Withheld
                3,282,799                      27,627



       2.  Proposal to ratify the appointment of
           PricewaterhouseCoopers LLP as auditors for 2000:

              For                 Against             Abstain
            3,284,627             10,825              14,974


     Abstentions have the same effect as votes against proposals
presented to stockholders other than election of directors.
"Non-votes" have no effect on the vote of the proposal.
A "non-vote" occurs when a nominee holding shares for a beneficial
owner votes on one proposal but does not vote on another proposal
because the nominee does not have discretionary voting power and
has not received instructions from the beneficial owner.

       Pursuant to the vote of shareholders, proposals 1 and 2
above were adopted and effective on July 21, 2000.

       Directors whose terms of office as Directors continued after
the Annual Shareholders' Meeting include:

                         Robert L. Bennett
                         Donald P. Miller
                         Robert B. Sims










ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        (a)  EXHIBITS

             (27)  Financial data schedule (Edgar Only)


        (b)  REPORTS ON 8-K

             Filed on August 31, 2000

             Item 3.  Bankruptcy or Receivership

             As previously reported, on March 10, 1989, Raytech
             Corporation (the "Company" or "Debtor") filed a voluntary
             petition for relief under Chapter 11 of Title 11 of the
             United States Code (the "Bankruptcy Code") with the
             United States Bankruptcy Court for the District of
             Connecticut (the "Bankruptcy Court").  Since the
             petition date, the Debtor has operated its business as
             debtor in possession in accordance with the provisions
             of the Bankruptcy Code.

             On August 31, 2000, the Bankruptcy Court entered an
             Order Confirming Raytech Corporation's Second Amended
             Plan of Reorganization (the "Confirmation Order"), which
             confirmed the Company's Second Amended Plan of
             Reorganization (the "Plan").  The "effective date of the
             plan," as used in the Bankruptcy Code, shall not occur
             until the satisfaction of certain conditions precedent
             (the "Effective Date").

             The Plan was proposed jointly by the Debtor, the
             Official Committee of Unsecured Creditors, the Guardian
             ad litem for Future Claimants, the Connecticut
             Department of Environmental Protection and the United
             States Environmental Protection Agency (the
             "Governments") and the Official Committee of Equity
             Holders in an agreement signed in October 1998
             providing for the basic terms of a consensual plan of
             reorganization.

             As previously disclosed, Orders of various courts
             have held the Debtor liable as a successor to Raymark
             Industries, Inc. for asbestos-related personal injury
             claims ("API Claims") and environmental claims of the
             Governments ("Environmental Claims") amounting to an
             estimated $7.2 billion in total liabilities.

             The Plan is based on a settlement providing for an
             exchange of allowed API Claims estimated to be $6.76
             billion and allowed Environmental Claims of $432
             million for 90% of the common stock of the Debtor with
             existing equity holders in the Debtor retaining 10% of
             the common stock in the Debtor.  In accordance with the
             Plan, all present and future API Claims will be assumed
             and resolved by an independently administered claims
             trust (the "PI Trust").  On the Effective Date, a
             channeling injunction ordered by the Bankruptcy Court
             pursuant to Section 24(g) of the Bankruptcy Code will
             permanently and forever stay, enjoin and restrain any
             asbestos-related claims against the Debtor, thereby
             channeling such claims to the PI Trust for resolution.

             The Plan provides for the classification and
             treatment of all claims and equity interests and on the
             Effective Date the rights afforded and the treatment of
             all claims and equity interests in the Plan shall be in
             exchange for and in complete satisfaction, discharge
             and release of all claims and equity interests against
             the Debtor.

             The total assets of the Debtor as of July 2000
             month-end of $235.5 million consist of investments in
             subsidiaries of $93 million and a deferred tax asset of
             $141 million.  The total liabilities as of that date
             consist of liabilities subject to compromise of $7.2
             billion offset by negative equity of $7.0 billion.

             The Effective Date of the Confirmation Order is
             subject to the following conditions precedent:  (a)
             The Bankruptcy Court and United States District Court
             shall have entered an order or orders establishing the
             asbestos personal injury permanent channeling
             injunction and the claims trading injunction, (b) the
             enabling agreement of the PI Trust is signed and in
             effect and (c) certain favorable rulings have been
             obtained from the Internal Revenue Service concerning
             the Plan or in lieu thereof opinions of counsel.  The
             date of fulfillment of the referenced conditions and
             the Effective Date are unknown at this time.



                            SIGNATURE


         Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned thereunto duly authorized.

                                      RAYTECH CORPORATION


                                  By: /s/JOHN B. DEVLIN
                                      John B. Devlin
                                      Vice President, Treasurer
                                      and Chief Financial Officer

Date: November 10, 2000