FORM 10-Q
 
                  SECURITIES AND EXCHANGE COMMISSION
                        WASHINGTON, D.C. 20549
 
              Quarterly Report Under Section 13 or 15(d)
                of the Securities Exchange Act of 1934 
 
 
 For the Quarter ended                March 29, 1998                    
  
 
 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 512, One 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 March 29, 1998, 3,409,677 shares of the Registrant's
 common stock, par value $1.00, were issued and outstanding.
  
 
                              Page 1 of 32
   
                        RAYTECH CORPORATION  
 
                               INDEX  
 
 
                                                            Page     
                                                           Number
 
 PART I.       UNAUDITED FINANCIAL INFORMATION: 
 
 Item 1.   Condensed Consolidated Balance Sheets as           
           at March 29, 1998 and December 28, 1997             3
 
           Condensed Consolidated Statements of  
           Operations for the thirteen weeks 
           ended March 29, 1998 and March 30, 1997             4
          
           Condensed Consolidated Statements of Cash  
           Flows for the thirteen weeks ended
           March 29, 1998 and March 30, 1997                   5
                                                 
           Notes to Condensed Consolidated 
           Financial Statements                                6 
  
           Consolidated Statements of Shareholders' 
           Equity - 1997                                       7
  
           Consolidated Statements of Shareholders'
           Equity - 1998                                       8
  
  Item 2.  Management's Discussion and Analysis of                    
           Financial Condition and Results of Operations      20 
  
  
  PART II. OTHER INFORMATION
  
  Item 1.  Legal Proceedings                                  23
  
  Item 6.  Exhibits and Reports on Form 8-K                   31 
  
           Signature                                          32 
  
  
  
  
  
  
  
  
  
  
                                 -2-
    <PAGE>
  

RAYTECH CORPORATION


<TABLE>

CONDENSED CONSOLIDATED BALANCE SHEETS 
(in thousands, except share data)(Unaudited)   
<CAPTION>
                                                                  March 29,   Dec. 28,
As at                                                               1998       1997  
<S>                               <C>                            <C>         <C>
                                                                 
ASSETS                                                                        
Current assets                                                                
  Cash and cash equivalents                                      $  8,641    $  9,913
  Trade accounts receivable, less allowance of $746                                
    for 1998 and $672 for 1997                                     31,486      26,903
  Inventories                                                      28,292      28,202
  Other current assets                                              9,540       8,590
      Total current assets                                         77,959      73,608
 
Property, plant and equipment                                     146,639     143,131
  Less accumulated depreciation                                    84,021      82,141
      Net property, plant and equipment                            62,618      60,990
Investment in and advances to affiliates                           10,255      10,249
Other assets                                                        8,525       8,538
Total assets                                                     $159,357    $153,385
                                                                                      
LIABILITIES                                                                           
Current liabilities                                                                   
  Notes payable                                                    12,325      13,039
  Current portion of long-term debt - Raymark                      11,691       9,970
  Current portion of long-term debt                                   145         130
  Accounts payable                                                 18,242      20,703
  Accrued liabilities                                              25,348      22,442
      Total current liabilities                                    67,751      66,284
                                                                                      
Long-term debt due to Raymark                                      20,359      21,988
Long-term debt                                                      2,207       1,178
Postretirement benefits other than pensions                        10,228      10,044
Other long-term liabilities                                         5,984       5,429
Total liabilities                                                 106,529     104,923
                                                                                   
SHAREHOLDERS' EQUITY                                                                  
Capital stock                                                                         
  Cumulative preference stock, no par value                                           
  800,000 shares authorized, none issued & outstanding                                
  Common stock, par value $1.00                                                   -   
  7,500,000 shares authorized, 5,541,736 and 5,417,367                      
    issued and outstanding in fiscal 1998 and 1997, respectively    5,542       5,417
Additional paid in capital                                         70,481      70,275 
Accumulated deficit                                               (19,690)    (23,384)
Accumulated other comprehensive income                              1,056         715
                                                                   57,389      53,023 
Less treasury shares at cost                                       (4,561)     (4,561)
      Total shareholders' equity                                   52,828      48,462
Total liabilities and shareholders' equity                       $159,357    $153,385

The accompanying notes are an integral part of these statements.
<PAGE>
</TABLE>
                       RAYTECH CORPORATION
         CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                (in thousands, except share data)


<TABLE>
<CAPTION>



                                                                             
                                                      March 29,      March 30,
For the 13 Weeks Ended                                  1998           1997  
<S>                                                   <C>            <C>
                                                                    
                                                       
Net sales                                           $  62,895       $ 59,121
Cost of sales                                         (48,200)       (45,193)
                                                       
  Gross profit                                         14,695         13,928
                                                       
Selling, general and administrative expenses           (6,844)        (7,141)
 
  Operating profit                                      7,851          6,787
                                                                   
Interest expense                                         (229)          (318)
Interest expense - Raymark                               (674)          (469)
Other income (expense), net                              (259)           482
                                                        
Income before provision for income taxes
  and minority interest                                 6,689          6,482
Provision for income tax                               (2,542)        (1,954)
Minority interest                                        (453)          (246)
    
Net income                                          $   3,694       $  4,282
    
Basic earnings per share                            $    1.10       $   1.32

Diluted earnings per share                               1.05           1.22
              
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>






<PAGE>
  
                       RAYTECH CORPORATION

         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (in thousands)

<TABLE>
<CAPTION>

                                                                               
                                                       March 29,    March 30,
For the 13 Weeks Ended                                   1998         1997  
<S>                                                   <C>          <C>

    Net cash provided by operating activities         $  2,376     $  4,521

Cash flow from investing activities:
  Capital expenditures                                  (4,512)      (2,859)
  Proceeds on sale of property, plant and equipment         36           54
  Note receivable due from AFM                              -            37
  Payments to AFM for land and building                     -        (7,076)
    Net cash used in investing activities               (4,476)      (9,844)

Cash flow from financing activities:

  Cash overdraft                                           253          -
  Proceeds from short-term borrowings                      337          -
  Payments on short-term borrowings                     (1,001)      (1,498)
  Principal payments on long-term debt                     (68)         (42)
  Proceeds from long-term borrowings                     1,013          484
  Payments on borrowings from Raymark                       -          (951)
  Other                                                    330          (32)

    Net cash used in financing activities                  864       (2,039)

Effect of exchange rate changes on cash                    (36)         (58)

Net change in cash and cash equivalents                 (1,272)      (7,420)

Cash and cash equivalents at beginning of period         9,913       11,341

Cash and cash equivalents at end of period            $  8,641     $  3,921



The accompanying notes are an integral part of these statements.
    
<PAGE>

</TABLE>
<TABLE>
                                    RAYTECH CORPORATION
                      CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                             (in thousands, except share data)
<CAPTION>


                                                                  Accumulated
                           Number              Paid                   Other                   
                          of Shares   Common    in   Accumulated  Comprehensive    Treasury Stock   
                           Issued      Stock  Capital   Deficit      Income       Cost      Shares  
  <C>      <C> <C>        <C>        <C>      <C>      <C>           <C>        <C>      <C>

Balance,
  December 29, 1996       5,371,821  $ 5,372  $70,208  $ (38,922)    $ 1,918    $(4,561) (2,132,059)     

Stock options exercised      16,520       16       22                        

Cumulative translation
  adjustment                                                            (734)

Purchase of treasury  
  stock

Net income for the
 period ended     
 March 30, 1997                                            4,282                                    
Balance,
 March 30, 1997           5,388,341  $ 5,388  $70,230  $ (34,640)    $ 1,184    $(4,561) (2,132,059)
<FN>
The accompanying notes are an integral part of these statements.
<FN>






<PAGE>

</TABLE>
<TABLE>
                                    RAYTECH CORPORATION
                      CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                             (in thousands, except share data)

<CAPTION>

                                                                    Accumulated
                           Number              Paid                   Other                   
                          of Shares   Common    in   Accumulated   Comprehensive   Treasury Stock   
                           Issued      Stock  Capital   Deficit       Income      Cost      Shares  
  <C>      <C> <C>        <C>        <C>      <C>      <C>           <C> <C>    <C>      <C>

Balance,
  December 28, 1997       5,417,367  $ 5,417  $70,275  $ (23,384)    $   715    $(4,561) (2,132,059)     

Stock options exercised     124,369      125      206                        

Cumulative translation
  adjustment                                                             341 

Purchase of treasury  
  stock

Net income for the
 period ended     
 March 29, 1998                                            3,694                                    
Balance,
 March 29, 1998           5,541,736  $ 5,542  $70,481  $ (19,690)    $ 1,056    $(4,561) (2,132,059)
<FN>
The accompanying notes are an integral part of these statements.<PAGE>
  
<FN>

                       
                       RAYTECH CORPORATION  
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  
             (dollars in thousands, except share data)
                            (Unaudited)
  
  
  NOTE:  For purposes of the notes and Item 2, Raytech Corporation
         and its subsidiaries are referenced on a consolidated basis
         as "Raytech" or the "Company" where appropriate.
  
   
  NOTE A - RESTRUCTURING OF RAYTECH, CHAPTER 11 PROCEEDINGS 
           AND OTHER LITIGATION
  
        Raytech Corporation ("Raytech" or the "Company") was
  incorporated on June 13, 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 at its October 1986 Annual Meeting 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.  Each warrant entitled the
  holder to purchase one share of Raytech common stock at a price of
  $9.00 at any time, subject to certain limitations, prior to
  October 1, 1991, extended to 1994.  The warrants expired on
  October 1, 1994.  Raymark, thereby, became a wholly-owned
  subsidiary of Raytech.  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.
  
        Prior to the formation of Raytech, Raymark was first sued
  in an asbestos-related claim in 1971 and has since been named as a
  defendant in more than 88,000 lawsuits in which substantial
  damages have been sought for injury or death from exposure to
  airborne asbestos fibers.  More than 35,000 of such lawsuits have
  been disposed of by settlements, dismissals, summary judgments and
  trial verdicts at a cost in excess of $333,000 principally covered
  by Raymark's insurance.  Subsequent to the sale of Raymark, as
  described below, 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.
  
    <PAGE>
        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 legal
  liabilities and costs that may result from asbestos litigation. 
  Management believes that each purchase by Raytech from Raymark
  complies 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.  Consideration received for
  the Raymark stock consisted of $50 cash paid at the closing and a
  7-l/2% $950 promissory note to be paid in six equal annual
  installments beginning one year after the closing with interest
  payable annually.  This transaction resulted in a pretax loss of
  approximately $59,000 which was reflected in the 1988 consolidated
  financial statements.  
  
        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.  The dollar value of these lawsuits cannot be estimated. 
  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.  In February 1989, an involuntary petition in bankruptcy was
  filed against Raymark, and subsequently, a restrictive funding
  order was issued by an Illinois Circuit Court, which required one
  of Raymark's insurance carriers to pay claims but not defense
  costs, and another 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, as provided in the indemnity section of the acquisition
  agreement.  Raytech management was informed that Raymark's cost of
  defense and disposition of cases up to the automatic stay of
  litigation under the involuntary bankruptcy proceedings was
  approximately $333 million of Raymark's total insurance coverage
  of approximately $395 million.  Raytech management was also
  informed that as a result of the dismissal of the involuntary
  petition, Raymark again encountered 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. 
  However, in March 1998 Raymark filed a voluntary bankruptcy
  petition naming several large asbestos-related judgment creditors.
  
        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.
  
        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 desire 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. 
  
        Since the bankruptcy filing several entities have
  asserted claims in Bankruptcy Court alleging environmental
  liabilities of Raymark based upon similar theories of successor
  liability against Raytech as alleged by asbestos claimants.  These
  claims are not covered by the class action referenced below and
  will be resolved in the bankruptcy case.  The environmental claims
  include a claim of the Pennsylvania Department of Environmental
  Resources ("DER") to perform certain activities in connection with
  Raymark's Pennsylvania manufacturing facility, which includes
  submission of an acceptable closure plan for a landfill containing
  hazardous waste products located at the facility and removal of
  accumulated baghouse dust from its operations.  In March 1991, the
  Company entered a Consent Order which required Raymark to submit a
  revised closure plan which provides for the management and removal
  of hazardous waste, for investigating treatment and monitoring of
  any contaminated groundwater and for the protection of human
  health and environment at the site, all relating to the closure of
  the Pennsylvania landfill and to pay a nominal civil penalty.  The
  estimated cost for Raymark to comply with the order is $1.2
  million.  The DER has reserved its right to reinstitute an action
  against the Company and the other parties to the DER order in the
  event Raymark fails to comply with its obligations under the
  Consent Order.  Another environmental claim was filed against the
  Company by the U.S. Environmental Protection Agency for civil
  penalties charged Raymark in the amount of $12 million arising out
  of alleged Resource Conservation and Recovery Act violations at
  Raymark's Stratford, Connecticut, manufacturing facility.  
  
        In January 1997, the U.S. Environmental Protection Agency
  ("EPA") and the State of Connecticut filed suit against Raymark
  claiming $212 million in damages for cleanup of the Stratford,
  Connecticut, site.  The EPA has also filed a bankruptcy claim
  against Raytech as a successor to Raymark for cleanup of the 
  Stratford site and other Raymark sites.  Determination of
  Raytech's liability for such claims, if any, is subject to
  Bankruptcy Court deliberations and proceedings.  It is possible
  that additional claims for reimbursement of environmental cleanup
  costs related to Raymark facilities may be asserted against
  Raytech, as successor in liability to Raymark.  
  
        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, 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.  RPC
  continues to assess the extent of the contamination and its
  involvement and is currently negotiating with IDEM for an agreed
  order of cleanup.  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 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.  The
  Company incurred $1,751 in legal and testing costs associated with
  this matter during fiscal years 1996 and 1997 and has filed for
  reimbursement from Raymark under the indemnification agreement. 
  The amount is included in other current assets at December 28,
  1997.  An additional $31 in legal costs has been incurred in 1998.
  
        As a result of an inspection, the Company has been
  notified that the operations purchased from AFM in January 1996 in
  Sterling Heights, Michigan, are in violation of a consent order
  issued by the Michigan Department of Environmental Quality
  ("DEQ").  The consent order included a compliance program
  providing for measures to be taken to bring certain operations
  into compliance and recordkeeping on operations in compliance. 
  Potential fines for the violations were as high as $4.6 million;
  however, negotiations with the DEQ have been in progress
  concerning the compliance program and fines for past violations,
  resulting in a tentative agreement providing for a consent
  judgment with a fine of $324 and subject to completion of certain
  operational compliance programs.  Finalization of the consent 
  
  <PAGE>
judgment is pending.  The Company has accrued the cost of
  resolution of this matter.
  
        Under bankruptcy rules, the debtor-in-possession has
  an exclusive period in which to file a reorganization plan. 
  Such exclusive period had been extended by the Bankruptcy Court
  pending the conclusion of the successor liability litigation.  
  However, in December 1992, the creditors' committee filed a
  motion to terminate the exclusive period to file a plan of 
  reorganization.  At a hearing in May 1993, the motion was
  denied by the Bankruptcy Court but was appealed by the
  creditors' committee.  In November 1993, the U.S. District
  Court reversed the Bankruptcy Court and terminated the
  exclusive period to file a plan of reorganization effective in
  January 1994.  Accordingly, any party in interest, including
  the debtor, the creditors' committee, or a creditor could
  thereafter file a plan of reorganization.
  
        In May 1994, Raytech filed a Plan of Reorganization
  ("Debtor's Plan") in the U.S. Bankruptcy Court for the purpose
  of seeking confirmation allowing Raytech to emerge from the
  bankruptcy filed March 10, 1989.  Important conditions
  precedent to confirmation of the Debtor's Plan include a final
  judgment in the litigation to determine to what extent Raytech
  is a successor to the liabilities of Raymark and a resolution
  of the environmental claims or other claims filed or to be
  filed by governmental agencies.  The Debtor's Plan provides
  that in the event Raytech is found to be a successor, it is to
  establish a successor trust funded by an amount determined to
  be the difference between what Raytech should have paid for the
  businesses purchased from Raymark less the amount actually paid
  and less amounts to be paid for environmental and other claims. 
  This remedy would satisfy its obligations as a successor in
  full and render all claimants unimpaired, thereby eliminating
  the need for balloting and all equity shareholders would retain
  their interests in full.  Raytech is reviewing the Debtor's
  Plan to determine applicability and possible amendment in view
  of developments in the bankruptcy proceedings.  In September
  1994, the creditors' committee filed its own Plan of
  Reorganization in competition to the Debtor's Plan ("Creditors'
  Plan").  The Creditors' Plan calls for the elimination of
  Raytech Corporation and its stockholders to be replaced with a
  new Raytech.  All of the stock of new Raytech would then be
  distributed to unsecured claimants, environmental claimants and
  both past and future asbestos disease claimants on a formulated
  basis set forth in the Plan.  Current stockholders of Raytech
  would receive nothing under the Plan.  Raytech believes the
  Creditors' Plan is unconfirmable and will vigorously contest
  attempts to have it confirmed.  Upon motion of the parties and
  support of the Bankruptcy Court, the major interested parties
  agreed in August 1995 to participate in non-binding mediation
  to attempt to effectuate a consensual plan of reorganization. 
 <PAGE>
  
  The mediation process commenced in October 1995 and was
  concluded in March 1996 without agreement for a consensual plan
  of reorganization.  The competing plans of Raytech and its
  creditors have returned to Bankruptcy Court procedures.  The
  outcome of these matters is expected to take considerable time
  and is uncertain.  If an adverse plan is confirmed, it would
  have a material adverse impact on Raytech and its stockholders.
  
        The process for confirmation of a reorganization plan
  was begun in 1996 and continues with adversary positions being
  presented to the Bankruptcy Court by the parties concerning the
  claims bar date, the notice to claimants and estimation of
  claims.
        
        In November 1996, Raytech filed an adversary
  proceeding complaint against the creditors' committee, seeking
  a declaratory judgment of the Bankruptcy Court that Raytech's 
  liability to present and future creditors as a successor to
  Raymark is limited pursuant to bankruptcy law.  The creditors'
  committee filed a motion for a summary judgment, which was
  granted by the Bankruptcy Court at a hearing in August 1997. 
  Raytech considers the grant of the summary judgment dismissing
  the proceeding as unfounded in fact and law and has filed an
  appeal of the order.
  
        Several other matters have been filed in the
  Bankruptcy Court in 1996 and 1997 but not acted upon as yet and
  remain pending, including:  (1)  A creditors' committee motion
  for the appointment of a trustee to manage the Company; (2) 
  Raytech's motion to dismiss its bankruptcy petition based upon
  Raymark providing indemnity for liability claims that may be
  filed against it; (3) a creditors' committee adversary
  proceeding complaint seeking to assert control over Raymark and
  its assets on the grounds of fraudulent transfers in the
  reorganization of Raytech in 1986 and the divestiture of
  Raymark in 1988; (4) a creditors' committee adversary
  proceeding complaint to litigate alternative theories of
  liability of Raytech other than successor liability; and (5) a
  creditors' committee adversary proceeding complaint to sanction
  Raytech for violation of a stipulation to give notice for non-
  ordinary course transactions by Raytech subsidiaries.  In March
  1998, the creditors' committee filed a motion to activate the
  complaint seeking to assert control over Raymark and its
  assets, which is pending before the Court.
  
        In February 1997, Raytech resumed making monthly
  payments of $650,000 to Raymark pursuant to the 1987 Asset
  Purchase Agreement as amended, to ensure indemnification for
  Raymark liabilities.  In November 1997, the creditors'
  committee filed an adversary proceeding complaint and motion
  for a temporary restraining order to halt the payments based
  upon several theories, including a waste of assets and breach
   <PAGE>
  of a prior stipulation and fiduciary duty.  In January 1998,
  the Bankruptcy Court enjoined the payments pending a trial. 
  Raymark notified its retirees by letter that their benefits
  would cease after February 1998 due to the effect of the
  cessation of payments from Raytech under the injunction. 
  Raymark and Raymark retirees intervened in the action resulting
  in a Bankruptcy Court order to Raytech to supplement Raymark's
  obligations to its retirees pending a trial in April 1998.  In
  March 1998, prior to the trial, Raytech advised the Court that
  under the circumstances it would not make the payments
  resulting in the trial being put over and the order concerning
  Raymark's obligations to its retirees put in abeyance.
  
        Following Raytech's cessation of the $650,000 note
  payments 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 1998 Raymark filed a voluntary petition 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 is seeking to have the venue of the
  Raymark bankruptcy transferred from Utah to the Connecticut
  Court.  In April 1998, Raymark's parent, Raymark Corporation,
  also filed a voluntary petition in bankruptcy in the Utah Court
  and the creditors' committee is seeking the transfer of venue
  to Connecticut as well.
  
        In relation to the termination of Craig R. Smith, the
  Company determined to pay severance in the amount of $279. 
  Upon receiving notice, the creditors' committee filed an action
  to prevent such payment and upon motion, the Court temporarily
  restrained the payment thereof which remains pending.
  
        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.
  
    <PAGE>
        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 and 1997 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 could have a material adverse impact
  on Raytech as it does not have the resources needed to fund
  Raymark's potentially substantial uninsured asbestos-related
  and environmental liabilities.  Determination of Raytech's
  actual liabilities are subject to the Bankruptcy Court's
  deliberations and rulings and the competing plans of
  reorganization filed in the Bankruptcy Court referenced above.
  
        The ultimate liability of the Company with respect to
  asbestos-related, environmental, or other claims cannot
  presently be determined.  Accordingly, no provision for such
  liability has been recorded in the financial statements.  The
  accompanying financial statements have been prepared assuming
  that the Company will continue as a going concern.  An
  unfavorable result on certain or all of the matters described
  above would have a material adverse effect on the Company's
  results of operations,  financial position and cash flows. 
  These uncertainties 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 and classification of recorded asset amounts or
  adjustments relating to establishment, settlement and
  classification of liabilities 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 consolidated financial statements contain all
  adjustments necessary to fairly present the financial position
   <PAGE>
  of Raytech as of March 29, 1998 and December 28, 1997, the
  results of operations for the thirteen weeks ended March 29,
  1998 and statements of cash flows for the weeks ended March 29,
  1998.  All adjustments are of a normal recurring nature.  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 December 28, 1997.
  
          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.
  
  
  NOTE C - INVENTORIES
  
          Net, inventories consist of the following:
  
                             March 29, 1998     December 28, 1997 
  
           Raw material           $ 9,984            $10,751 
           Work in process          7,571              7,760
           Finished goods          10,737              9,691
                                  $28,292            $28,202
  
  
  NOTE D - RELATED PARTIES
  
          (In January 1998, Craig R. Smith, formerly President
  and Chief Executive Officer of Raytech was terminated and
  resigned from the Board of Directors.  The following are
  disclosed because of the related relationships either directly
  or indirectly through Mr. Smith.)
               
           During the thirteen weeks ended March 29, 1998, the
  Company purchased yarn from Universal Friction Composites, a
  related party, in the amount of $1,043 and at March 29, 1998,
  the related payable amounted to $258.
  
          In March 1997, Allomatic Products Company ("APC"), a
  majority-owned subsidiary, declared a cash dividend of $2.81
  per share payable in equal quarterly installments to
  shareholders of record on March 31, 1997.  At the record date,
  Craig R. Smith beneficially owned 3,000 shares and was a
  related party to owners of 38,904 shares, or 40% of the
  outstanding shares.  The fourth quarterly installment was paid
  in February 1998.
  
          Earnings attributable to minority shareholders of
  Allomatic Products Company have been presented net of income
  tax as minority interest in the Condensed Consolidated
  Statement of Operations.
   <PAGE>
  Note E - EARNINGS PER SHARE


                      
                                                 For the Thirteen Weeks Ended
                                                 March 29,          March 30,
                                                   1998               1997   

Basic EPS Computation

                                
Numerator                                      $    3,694           $    4,282 

Denominator:

Common shares outstanding at
  beginning of year                             3,285,308            3,239,762
Weighted average of stock options
  exercised                                        64,886                7,066

Weighted average shares                         3,350,194            3,246,828

Basic earnings per share                            $1.10                $1.32 




Diluted EPS Computation

Numerator                                      $    3,694           $    4,282

Denominator:

Common shares outstanding                               
  at beginning of year                          3,285,308            3,239,762
Weighted average of stock options
  exercised                                        64,886                7,066

Dilutive potential common shares                  181,887              275,627

Adjusted weighted average shares                3,532,081            3,522,455

Diluted earnings per share                          $1.05                $1.22<PAGE>
  NOTE F - Comprehensive Income
  
 <PAGE>
NOTE F - Comprehensive Income          


          During the first quarter of 1998, the Company adopted 
  Statement of Financial Accounting Standards ("SFAS") No. 130,
  "Reporting Comprehensive Income" and has elected to report
  comprehensive income in the condensed consolidated statement of
  shareholders' equity.  Comprehensive income is the change in
  equity from transactions and other events from nonowner
  sources.  Comprehensive income includes net income and other
  comprehensive income.  The components and related activity of
  accumulated other comprehensive income, resulting from foreign
  currency adjustments, are as follows:
  
                                               Accumulated
                                                  Other
                                            Comprehensive Income
  
  Balance December 29, 1996                      $1,918
  Changes in First Quarter                         (734)
  
  Balance March 30, 1997                         $1,184
  
  Balance December 28, 1997                      $  715
  Changes in first quarter                          341
  
  Balance March 29, 1998                         $1,056
  
  
  Note G - Subsequent Event
  
          In January 1996 Raytech acquired the assets of
  Advanced Friction Materials Company ("AFM") and 47% of the
  stock of AFM.  The Stock Purchase Agreement ("Agreement")
  provided for the 53% stock owner to put his stock to Raytech
  anytime after two years.  The owner put 53% of AFM stock to
  Raytech, and based on the formulated amount of $6,044 in
  accordance with the Agreement it paid the $3,022 in April 1998,
  and the balance of $3,022 is payable in three equal annual
  installments.  Effective April 1998, Raytech will consolidate
  the results of AFM, which were previously recorded under the
  equity method.<PAGE>
  
  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
           CONDITION AND RESULTS OF OPERATIONS
  
  
  Summary
  
        Pretax income for the thirteen-week period ended
  March 29, 1998 amounted to $6,689 as compared to $6,482 for the
  corresponding period in 1997.  The increase of 3.2% is
  primarily due to higher net sales and lower selling, general
  and administrative expenses offset by lower margins in certain
  market segments.
  
             Net income for the thirteen-week period ended
  March 29, 1998 amounted to $3,694 or $1.10 per basic share as
  compared with $4,282 or $1.32 per basic share for the
  corresponding period in 1997.  In addition to the items
  included in pretax income, the Company's tax provision
  increased to $2,542 in 1998 as compared to $1,954 in 1997.  The
  primary reason for the increase is the reversal of certain
  valuation allowances in 1997 related to net operating loss
  carryforwards of the German operations.
   
  Net Sales
  
        Net sales for the thirteen-week period ended
  March 29, 1998 increased 6.4% to $62,895 as compared with
  $59,121 for the same period one year ago.  The overall
  improvement for the thirteen-week period is primarily due to
  additional sales volume within the domestic OEM and
  construction product market segments.  In addition, certain
  product lines within the aftermarket segment showed modest
  growth as the Company attempts to increase market share. 
  European sales increased by $2,046.  However, due to adverse
  foreign currency fluctuation that was reduced to $677 for the
  period.
  
  Gross Margin    
  
        Gross profit margin as a percentage of sales for the
  thirteen-week period ended March 29, 1998 is 23.4%, as compared
  to 23.6% for the same period one year ago.  The overall
  decrease is primarily due to an increase in domestic
  manufacturing labor and material costs, contractual price
  reductions to certain customers and a lower gross margin on
  domestic construction and foreign heavy duty sales.
  
  Selling, General and Administrative Expense
  
        Selling, general and administrative expenses
  decreased to $6,844 as compared to $7,141 one year earlier. 
  The decrease is primarily due to lower salaries as a result of
  reduced bonuses, legal expense and other administrative
  expenses.
  
  Income Taxes
  
        The effective tax rate for the thirteen weeks ended
  March 29, 1998 is 38%.  Included in the 1998 consolidated tax
  provision is a provision for foreign taxes in the amount of
  $298.  Included in the 1997 consolidated tax provision is a
  reserve adjustment for $500 relating to Germany net operating
  loss carryforwards.
  
  Impact of Year 2000 Computer-Related Issues
  
        RPC is currently implementing new computer systems at
  an approximate cost of $2 million to be completed in 1998.  The
  new systems will be Year 2000 compliant.  Other subsidiaries
  are currently assessing the impact of the Year 2000 compliance,
  and the Company does not expect the cost to be material to its
  financial position or results of operations or cash flows.
  
  Recently Issued Accounting Pronouncements
  
        In February 1998, SFAS No. 132, "Employers'
  Disclosures about Pensions and Other Postretirement Benefits,"
  was issued, effective for fiscal 1998.  The Company will adopt
  SFAS 132 in its annual financial statements for fiscal 1998 and
  is still assessing the impact of this statement on its
  disclosures.
        
  Liquidity and Capital Resources
  
        During the first quarter of fiscal 1998, the Company
  generated positive cash flow from operating activities in the
  amount of $2.4 million.  The positive cash flow is the result
  of the favorable earnings during the first quarter of fiscal
  1998.  Capital expenditures year-to-date for fiscal 1998
  amounted to $4.3 million, which is consistent with the
  Company's projected spending plan for 1998.
  
        At March 29, 1998, the Company's wholly-owned German
  subsidiaries had available unused lines of credit amounting to
  DM4,286 ($2,318) which all expire on demand.
  
        In November 1997, RPC refinanced its revolving line of
  credit in an effort to reduce its interest rate and to minimize
  facility fees.  The new loan agreement with NationsCredit,
  Commercial Funding provides for RPC to borrow up to $17 million
  in the aggregate, consisting of a revolving line of credit of
  $10 million and a term loan of $7 million for capital equipment
  purchases.  The loans bear an interest rate of .50% above the
  prime rate.  The loans are collateralized by accounts
   <PAGE>
  receivable, inventory and machinery and equipment.  The
  revolving loan allows the Company to borrow based on a
  borrowing base formula as defined in the Loan and Security
  Agreement (the "Agreement").  The Agreement includes certain
  covenant restrictions, including restrictions on dividends
  payable to Raytech Composites, Inc. ("RCI"), a wholly-owned
  subsidiary of the Company.  At March 29, 1998, the net
  restricted assets of RPC amounted to $27,000 consisting of
  cash, inventory, machinery and equipment and all other tangible
  and intangible assets, excluding land and buildings.  The
  purpose of the loan is to refinance existing indebtedness and
  for general working capital needs.  The outstanding balance
  under the revolving line of credit is $3,787 and under the term
  loan is $6,523 at March 29, 1998, respectively.  The additional
  borrowing availability on the revolving line of credit at
  March 29, 1998 is $0, based upon the asset borrowing formula.
  
        Management believes that the Company will generate
  sufficient cash flow from operations during the balance of 1998
  to meet all of the Company's obligations arising in the
  ordinary course of operations.<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 was first sued
  in an asbestos-related claim in 1971 and has since been named
  as a defendant in more than 88,000 lawsuits in which
  substantial damages have been sought for injury or death from
  exposure to airborne asbestos fibers.  More than 35,000 of such
  lawsuits were disposed of by settlements, dismissals, summary
  judgments and trial verdicts at a cost in excess of $333
  million principally covered by Raymark's insurance.  Subsequent
  to the 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.
  
       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.  The dollar value of these lawsuits
  cannot be estimated.  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.  In February 1989, an
  involuntary petition in bankruptcy was filed against Raymark,
  and subsequently, a restrictive funding order was issued by an
  Illinois Circuit Court, which required one of Raymark's
  insurance carriers to pay claims but not defense costs, and
  another 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, as provided in the indemnity section of the acquisition
  agreement.  Raytech management was informed that Raymark's cost
  of defense and disposition of cases up to the automatic stay of
  litigation under the involuntary bankruptcy proceedings was
  approximately $333 million of Raymark's total insurance
  coverage of approximately $395 million.  Raytech management was
  also informed that as a result of the dismissal of the
  involuntary petition, Raymark again encountered 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.  However, in March 1998 Raymark
  filed a voluntary bankruptcy petition naming several large
  asbestos-related judgment creditors.
  
      In October 1988, in a case captioned Raymond A. Schmoll v.
  ACandS, Inc., et al., the U.S. District Court for the District
  of Oregon ruled, under Oregon equity law, Raytech 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 cost of defense recited above, and in order to obtain
  a ruling binding across all jurisdictions on 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 Raymark's 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-filing 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 desire 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
   <PAGE>
  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>
       Since the bankruptcy filing, several entities have
  asserted claims in Bankruptcy Court alleging environmental 
  liabilities of Raymark based upon similar theories of successor
  liability against Raytech as alleged by asbestos claimants. 
  These claims are not covered by the class action referenced
  below and will be resolved in the bankruptcy case.  The
  environmental claims include a claim of the Pennsylvania
  Department of Environmental Resources ("DER") to perform
  certain activities in connection with Raymark's Pennsylvania
  manufacturing facility, which includes submission of an
  acceptable closure plan for a landfill containing hazardous
  waste products located at the facility and removal of
  accumulated baghouse dust from its operations.  In March 1991,
  the Company entered a Consent Order which required Raymark to
  submit a revised closure plan which provides for the management
  and removal of hazardous waste, for investigating, treatment
  and monitoring of any contaminated groundwater and for the
  protection of human health and environment at the site, all
  relating to the closure of the Pennsylvania landfill and to pay
   <PAGE>
  a nominal civil penalty.  The estimated cost for Raymark to
  comply with the order is $1.2 million.  The DER has reserved
  its right to reinstitute an action against the Company and the
  other parties to the DER order in the event Raymark fails to
  comply with its obligations under the Consent Order.  Another
  environmental claim was filed against the Company by the U.S.
  Environmental Protection Agency for civil penalties charged
  Raymark in the amount of $12 million arising out of alleged
  Resource Conservation and Recovery Act violations at Raymark's
  Stratford, Connecticut, manufacturing facility.  
  
       In January 1997, the U.S. Environmental Protection Agency
  ("EPA") and the State of Connecticut filed suit against Raymark
  claiming $212 million in damages for cleanup of the Stratford,
  Connecticut, site.  The EPA has also filed a bankruptcy claim
  against Raytech as a successor to Raymark for cleanup of the
  Stratford site and other Raymark sites.  Determination of
  Raytech's liability for such claims, if any, is subject to
  Bankruptcy Court deliberations and proceedings.  It is possible
  that additional claims for reimbursement of environmental
  cleanup costs related to Raymark facilities may be asserted
  against Raytech, as successor in liability to Raymark.  
  
       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, 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.  RPC continues to assess the extent of the
  contamination and its involvement and is currently negotiating
  with IDEM for an agreed order of cleanup.  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 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.  The Company incurred
  $1,751 in legal and testing costs associated with this matter
  in 1996 and 1997 and has filed for reimbursement from Raymark
  under the indemnification agreement.  An additional $31 in
  legal costs has been incurred in 1998.
  
       As a result of an inspection, the Company has been
  notified that the operations purchased from AFM in January 1996
  in Sterling Heights, Michigan, are in violation of a consent
   <PAGE>
  order issued by the Michigan Department of Environmental
  Quality ("DEQ").  The consent order included a compliance
  program providing for measures to be taken to bring certain
  operations into compliance and recordkeeping on operations in
  compliance.  Potential fines for the violations were as high as
  $4.6 million; however, negotiations with the DEQ have been in
  progress concerning the compliance program and fines for past
  violations, resulting in a tentative agreement providing for a
  consent judgment with a fine of $324 and subject to completion
  of certain operational compliance programs.  Finalization of
  the consent judgment is pending.  The Company has accrued the
  cost of resolution of this matter.
  
      Under bankruptcy rules, the debtor-in-possession has an
  exclusive period in which to file a reorganization plan.  Such
  exclusive period had been extended by the Bankruptcy Court
  pending the conclusion of the successor liability litigation. 
  However, in December 1992, the creditors' committee filed a
  motion to terminate the exclusive period to file a plan of
  reorganization.  At a hearing in May 1993, the motion was
  denied by the Bankruptcy Court but was appealed by the
  creditors' committee.  In November 1993, the U.S. District
  Court reversed the Bankruptcy Court and terminated the
  exclusive period to file a plan of reorganization effective in
  January 1994.  Accordingly, any party in interest, including
  the debtor, the creditors' committee or a creditor could
  thereafter file a plan of reorganization.  
  
      In May 1994, Raytech filed a Plan of Reorganization
  ("Debtor's Plan") in the U.S. Bankruptcy Court for the purpose
  of seeking confirmation allowing Raytech to emerge from the
  bankruptcy filed March 10, 1989.  Important conditions
  precedent to confirmation of the Debtor's Plan include a final
  judgment in the litigation to determine to what extent Raytech
  is a successor to the liabilities of Raymark and a resolution
  of the environmental claims or other claims filed or to be
  filed by governmental agencies.  The Debtor's Plan provides
  that in the event Raytech is found to be a successor, it is to
  establish a successor trust funded by an amount determined to
  be the difference between what Raytech should have paid for the
  businesses purchased from Raymark less the amount actually paid
  and less amounts to be paid for environmental and other claims. 
  This remedy would satisfy its obligations as a successor in
  full and render all claimants unimpaired, thereby eliminating
  the need for balloting and all equity shareholders would retain
  their interests in full.  Raytech is reviewing the Debtor's
  Plan to determine applicability and possible amendment in view
  of developments in the bankruptcy proceedings referenced in
  this Item 3.  In September 1994, the Creditors' Committee filed
  its own Plan of Reorganization in competition to the Debtor's
  Plan ("Creditors' Plan").  The Creditors' Plan calls for the
  elimination of Raytech Corporation and its stockholders to be
   <PAGE>
  replaced with a new Raytech.  All of the stock of new Raytech
  would then be distributed to unsecured claimants, environmental
  claimants and both past and future asbestos disease claimants
  on a formulated basis set forth in the Plan.  Current
  stockholders of Raytech would receive nothing under the Plan. 
  Upon motion of the parties and support of the Bankruptcy Court,
  the major interested parties agreed in August 1995 to
  participate in non-binding mediation to attempt to effectuate a
  consensual plan of reorganization.  The mediation process
  commenced in October 1995 and was concluded in March 1996
  without agreement for a consensual plan of reorganization. 
  Raytech believes the Creditors' Plan is unconfirmable and will
  vigorously contest attempts to have it confirmed.  The
  competing plans of Raytech and its creditors have returned to
  Bankruptcy Court procedures.  The outcome of these matters is
  expected to take considerable time and is uncertain.  If an
  adverse plan is confirmed, it would have a material adverse
  impact on Raytech and its stockholders.
  
       The process for confirmation of a reorganization plan was
  begun in 1996 and continues with adversary positions being
  presented to the Bankruptcy Court by the parties concerning the
  claims bar date, the notice to claimants and estimation of
  claims.
  
       In November 1996, Raytech filed an adversary proceeding
  complaint against the creditors' committee, et al., seeking a
  declaratory judgment of the Bankruptcy Court that Raytech's
  liability to present and future creditors as a successor to
  Raymark is limited pursuant to bankruptcy law.  The creditors'
  committee filed a motion for a summary judgment, which was
  granted by the Bankruptcy Court at a hearing in August 1997. 
  Raytech considers the grant of the summary judgment dismissing
  the proceeding as unfounded in fact and law and has filed an 
  appeal of the order.
  
       Several other matters have been filed in the Bankruptcy
  Court in 1996 and 1997 but not acted upon as yet and remain
  pending, including:  (1)  A creditors' committee motion for the
  appointment of a trustee to manage the Company; (2)  Raytech's
  motion to dismiss its bankruptcy petition based upon Raymark
  providing indemnity for liability claims that may be filed
  against it; (3) a creditors' committee adversary proceeding
  complaint seeking to assert control over Raymark and its assets
  on the grounds of fraudulent transfers in the reorganization of
  Raytech in 1986 and the divestiture of Raymark in 1988; (4) a
  creditors' committee adversary proceeding complaint to litigate
  alternative theories of liability of Raytech other than
  successor liability; and (5) a creditors' committee adversary
  proceeding complaint to sanction Raytech for violation of a
  stipulation to give notice for non-ordinary course transactions
  by Raytech subsidiaries.  In March 1998, the creditors'
  committee filed a motion to activate the complaint seeking to
  assert control over Raymark and its assets which is pending
  before the Court.
  
       In February 1997, Raytech resumed making monthly payments
  of $650,000 to Raymark pursuant to the 1987 Asset Purchase
  Agreement as amended, to ensure indemnification for Raymark
  liabilities.  In November 1997, the creditors' committee filed
  an adversary proceeding complaint and motion for a temporary
  restraining order to halt the payments based upon several
  theories, including a waste of assets and breach of a prior
  stipulation and fiduciary duty.  In January 1998, the
  Bankruptcy Court enjoined the payments pending a trial. 
  Raymark notified its retirees by letter that their benefits
  would cease after February 1998 due to the effect of the
  cessation of payments from Raytech under the injunction. 
  Raymark and Raymark retirees intervened in the action resulting
  in a Bankruptcy Court order to Raytech to supplement Raymark's
  obligations to its retirees pending a trial in April 1998.  In
  March 1998, prior to the trial, Raytech advised the Court that
  under the circumstances it would not make the payments
  resulting in the trial being put over and the order concerning
  Raymark's obligations to its retirees put in abeyance.
  
      Following Raytech's cessation of the $650,000 note
  payments in December 1997, Raymark commenced 33 separate
  lawsuits against Raytech subsidiaries in various jurisdictions
  ("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 1998 Raymark filed a voluntary petition 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 is seeking to have the venue of the
  Raymark bankruptcy transferred from Utah to the Connecticut
  Court.  In April 1998, Raymark's parent, Raymark Corporation,
  also filed a voluntary petition in bankruptcy in the Utah
  Court, and the creditors' committee is seeking the transfer of
  venue to Connecticut as well.
  
      In relation to the termination of Craig R. Smith, the
  Company determined to pay severance in the amount of $279. 
  Upon receiving notice, the creditors' committee filed an action
  to prevent such payment and upon motion the Court temporarily
  restrained the payment thereof which remains pending.
  
    <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.
  
      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 and 1997 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
  could have a material adverse impact on Raytech as it does not
  have the resources needed to fund Raymark's potentially
  substantial uninsured asbestos-related and environmental
  liabilities.  Determination of Raytech's actual liabilities are
  subject to the Bankruptcy Court's deliberations and rulings and
  the competing plans of reorganization filed in the Bankruptcy
  Court referenced above.
  
      The ultimate liability of the Company with respect to
  asbestos-related, environmental, or other claims cannot presently
  be determined.  Accordingly, no provision for such liability has
  been recorded in the financial statements.  The accompanying
  financial statements have been prepared assuming that the Company
  will continue as a going concern.  An unfavorable result on
  certain or all of the matters described above would have a
  material adverse effect on the Company's results of operations, 
  financial position and cash flows.  These uncertainties 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 and classification of
  recorded asset amounts or adjustments relating to establishment,
  settlement and classification of liabilities that may be required
  in connection with reorganizing under the Bankruptcy Code.
                           <PAGE>
  
  ITEM 6(a).  EXHIBITS
  
   (11)   Statement re. Computation of Per Share Earnings
  
  
  ITEM 6(b).  REPORTS ON 8-K
  
              Termination of President and CEO
  
               The Board of Directors terminated Craig R. Smith as
               President, Chief Executive Officer and Director of the
               Registrant corporation effective January 12, 1998 and
               elected Albert A. Canosa as President, Chief Executive
               Officer and Director in replacement.  Mr. Canosa
               previously served as Administrative Vice President,
               Chief Financial Officer and Treasurer of the
               Registrant corporation and will continue to hold the
               offices of Chief Financial Officer and Treasurer.
    <PAGE>
  
                            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 of
                                        Administration, Treasurer
                                        and Chief Financial Officer
  
  Date:  May 11, 1998  
  


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