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                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-K

/X/  Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange 
Act of 1934 for the fiscal year ended December 31, 1996.

/ /   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 1-2833

                                RAYTHEON COMPANY
             (Exact Name of Registrant as Specified in its Charter)

            DELAWARE                                 04-1760395
(State or Other Jurisdiction of    (I.R.S. Employer Identification  No.)
 Incorporation or Organization)
           
                141 SPRING STREET, LEXINGTON, MASSACHUSETTS 02173
               (Address of Principal Executive Offices) (Zip Code)

        Registrant's telephone number, including area code (617) 862-6600

               Securities registered pursuant to Section 12(b) of the Act:

      Title of Each Class             Name of Each Exchange on Which Registered

 Common Stock, $1.00 par value            New York Stock Exchange
 Preferred Stock, No par value            Chicago Stock Exchange
                                          Pacific Stock Exchange

     Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes .X. No ...

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [x]

The aggregate market value of the voting stock held by non-affiliates of the
Registrant, as of February 23, 1997, was approximately $11,070,735,098. For
purposes of this disclosure, non-affiliates are deemed to be all persons other
than members of the Board of Directors of the Registrant.

Number of shares of Common Stock outstanding as of February 23, 1997:236,293,354

       Documents incorporated by reference and made a part of this Form 10-K:

 Portions of Raytheon's Annual Report to Stockholders  Part I, Part II, Part IV
 for the fiscal year ended December 31, 1996

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                                     PART I

Item 1.  Business

                                     GENERAL

         Raytheon Company ("Raytheon" or the "Company") is an international,
high technology company which operates in four businesses: commercial and
defense electronics, engineering and construction, aircraft and major
appliances. Historically the Company's principal business has been the design,
manufacture and servicing of advanced electronic devices, equipment and systems
for government and commercial use, and Raytheon remains a top tier defense
contractor in the United States. Through a diversification program begun in
1964, Raytheon has become a major competitor in engineering and construction
services, aircraft products and major appliances. In recent years, the Company
has strengthened its businesses through consolidation, operational improvement
and acquisitions and has diversified core defense technologies into commercial
markets while remaining a strong defense company.

         Sales to the United States Government (the "Government"), principally
to the Department of Defense ("DOD"), were $5.140 billion in 1996 and $4.677
billion in 1995 representing 41.7% of total sales in 1996 and 39.6% in 1995. Of
these sales, $502 million in 1996 and $597 million in 1995 represented purchases
made by the Government on behalf of foreign governments.

                               RECENT DEVELOPMENTS

         On January 4, 1997, the Company entered into an Asset Purchase
Agreement (the "Asset Purchase Agreement") with Texas Instruments Incorporated
("Texas Instruments") pursuant to which the Company agreed to purchase
substantially all of the assets of, and to assume substantially all of the
liabilities related to, the Defense Systems and Electronics business (the
"Defense Business") of Texas Instruments. The consideration to be paid by the
Company in connection with the purchase of the Defense Business is $2.875
billion in cash, subject to adjustment for certain changes in the net assets of
the Defense Business between September 30, 1996 and the closing date of the
purchase (and not including an additional payment of $75 million in respect of a
related assignment and license of certain related intellectual property).

         On January 16, 1997, Raytheon entered into an Agreement and Plan of
Merger (the "Merger Agreement") with HE Holdings, Inc. ("Hughes"), a Delaware
corporation and an indirect, wholly owned subsidiary of General Motors
Corporation, a Delaware corporation ("GM"), pursuant to which Raytheon agreed to
merge with and into Hughes (the "Merger").
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         Immediately prior to the consummation of the Merger, Hughes will be
spun off to the holders of GM's $1-2/3 and Class H common stocks in a
transaction intended to be tax-free to Hughes, GM and such holders. Immediately
prior to the spin-off, GM will consummate a series of transactions such that, at
the time of the spin-off Hughes will consist primarily of the defense business
of Hughes Electronics Corporation, the parent corporation of Hughes. In
connection with the spin-off and subsequent merger, two classes of common stock
will be created: Class A common stock, which will be held by GM $1-2/3 and Class
H stockholders after the spin-off; and Class B common stock.

         Immediately following the spin-off of Hughes, Raytheon and Hughes will
consummate the Merger. In the Merger, Raytheon stockholders will receive all of
the Class B common stock of the combined company. The Class B common stock will
represent approximately 70 percent of the equity of the combined company, and
the Class A Common stock will represent the remaining equity, approximately 30
percent.

         The Merger Agreement provides that Hughes' total debt as of the time of
the Merger will be adjusted to reflect variations in the market price of
Raytheon stock, subject to specified limits. Prior to the Merger, Raytheon has
agreed that Hughes may borrow, and become liable to repay, approximately $4.4
billion, which amount will be contributed by Hughes to GM or another affiliate
of GM that is not a subsidiary of Hughes and the proceeds of which will
therefore not be assets of Hughes as of the time of the Merger. The actual
amount will be determined by subtracting from $9.5 billion any other outstanding
debt of Hughes as of the effective time of the Merger and the product of (x) the
number of shares of Class A common stock to be issued to GM stockholders
(102,630,503 shares) and (y) the average closing market price of the Company's
Common Stock during the 30-day period ending on the fifth day prior to
consummation of the Merger; provided that in the event such average price is
less than $44.42, it will be deemed to be $44.42, and in the event such price is
more than $54.29, it shall be deemed to be $54.29. Based on the midpoint of this
range, approximately $5.1 billion in common stock would be issued to the Class A
stockholders. The balance of the $9.5 billion transaction value would then be
made up of approximately $4.4 billion in Hughes debt. Such debt would become a
liability of the combined company.

         The transaction is subject, among other things, to approval of the
Company's stockholders, certain regulatory approvals (including
Hart-Scott-Rodino antitrust review), approval by the holders of GM $1-2/3 and
Class H common stocks and receipt by GM of rulings from the Internal Revenue
Service relating to certain federal tax consequences of the transaction.

         On February 23, 1997, the Company announced its intention to explore
strategic alternatives for the Appliance Group, including its possible sale.
Proceeds from such a sale would be used to reduce the debt to be incurred in
connection with the acquisition of the defense business of Texas Instruments and
the merger with Hughes. The Company believes that the sale of the Appliance
Group would allow the Company to focus on its core businesses, defense
electronics, engineering and construction, and aircraft, while also helping to
reduce its debt level.
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                      ENGINEERING AND CONSTRUCTION SEGMENT

         The Engineering and Construction segment is one of the largest
engineering, construction and operations and maintenance organizations in the
world with approximately 16,800 employees. It offers a full range of program
management capabilities including project planning, financing, process
development, engineering, design, construction, start-up, operations and
maintenance services. Its markets include: fossil and nuclear power; petroleum
and gas; polymers and chemicals; pharmaceuticals and biotechnology; metals,
mining, and light industry; pulp and paper; food and consumer products;
environmental services, including chemical munitions destruction; infrastructure
and transportation; test range, base and facilities management and maintenance;
and air traffic control support services.

         Raytheon Engineers & Constructors was formed in 1993 through the
consolidation of United Engineers & Constructors, Badger, Raytheon Service
Company and Cedarapids. During 1993 Raytheon Engineers & Constructors acquired
the infrastructure, power and construction operations of Ebasco Services
Incorporated. In July 1995 Raytheon Engineers & Constructors purchased assets of
Houston-based Litwin Engineers & Constructors, adding to the Company's refining
and petrochemical capabilities. During 1996, Raytheon Engineers & Constructors
acquired the pulp and paper, industrial process engineering and construction
assets of Rust International Inc.

         Raytheon Engineers & Constructors undertakes some engineering and
construction projects on a firm fixed price basis ("lump sum turnkey") and as a
result benefits from cost savings and carries the burden of cost overruns.

         Raytheon Service Company is one of the nation's leading government
technical support contractors. It provides operations, maintenance and support
services for many U.S. defense systems, including SSPARS and BMEWS early warning
radars; the U.S. Air Force's Eastern Range; the Army's Kwajalein Missile Range
in the Pacific, and the Navy's Atlantic Undersea test and evaluation centers in
the Atlantic. Raytheon also provides technical support services to the Federal
Aviation Administration.

         The segment offers rock-crushing, asphalt-mixing and asphalt-paving
equipment under the Cedarapids name to customers in the U.S. and
internationally. It also performs steel and vessel fabrication and markets
on-site soil remediation systems that remove gasoline and diesel fuel
contaminants.

                                AIRCRAFT SEGMENT

         In 1994 Raytheon combined Beech Aircraft and Raytheon Corporate Jets to
form Raytheon Aircraft. The segment offers the broadest product line in general
and business aviation manufacturing, marketing and supporting piston-powered
aircraft, turboprops and midsize and light jets for the world's commercial,
regional airline and military markets. Raytheon Aircraft remained the premier
general aviation manufacturer in 1996, leading the industry in total fixed wing
aircraft shipments for business and government customers.
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         Raytheon Aircraft's piston-powered aircraft line includes the famous
single-engine Beech Bonanza and the twin-engine Beech Baron aircraft for
business and personal flying. The segment's King Air jetprop series --
introduced in 1964 -- includes the Beech King Air's C90, B200 and 350, which
have outsold every line of business jet and turboprop since entering the market.
The jet line includes the Beechjet 400A and the Hawker midsize business jet line
consisting of the Hawker 1000 and the Hawker 800XP (Extended Performance).
Raytheon Aircraft is the leading producer of 19-passenger regional airliners,
selling the Beech 1900D stand-up cabin aircraft to commuter airlines and
corporate customers. In September 1995, Raytheon Aircraft introduced a new light
business jet, the Raytheon Premier I. In November 1996, Raytheon Aircraft
introduced a new super midsize business jet, the Hawker Horizon.

         The segment supplies aircraft training systems for the military,
including the Beech Pilatus PC-9MkII trainer selected as the next-generation
trainer for the U.S. Air Force and Navy under the Joint Primary Aircraft
Training (JPATS) contract. Deliveries are scheduled to begin in 1998. Raytheon
Aircraft also produces the U.S. Air Force's T-1A trainer, the military
counterpart of the Beechjet 400A light jet, a C-12 militarized version of the
King Air B200 and the U-125 search-and-rescue variant of the Hawker 800. The
T-1A Jayhawk contract will be completed in 1997. It also produces two missile
target drones for U.S. and allied forces.

         Raytheon Aerospace manages more than 1,700 aircraft at over 160 sites
around the world and provides total contractor logistics and training support
for military and other government aircraft and missile target systems. Raytheon
Aircraft Services operates a network of business aviation service operations at
airports across the U.S.

                            MAJOR APPLIANCES SEGMENT

         The Major Appliances segment, which merged its Amana Refrigeration,
Inc. and Speed Queen Company subsidiaries in 1996 to form Raytheon Appliances,
manufactures and sells household and commercial appliances under the Amana,
Speed Queen, UniMac, Huebsch and Menumaster brand names. Products include
refrigerators, gas and electric ranges, cooktops, wall ovens and microwave
ovens, home washers and dryers and commercial laundry equipment for use in coin
laundries and institutional settings, freezers, dishwashers, room air
conditioners, furnaces, package terminal air conditioners, central air
conditioning systems, heat pumps and commercial microwave ovens. Home appliance
products are sold to dealers for resale to the customer and to home builders for
incorporation into new homes and apartments. Commercial appliances are sold to
distributors for resale to installing dealers or contractors.

         Raytheon Appliances offers several industry-exclusive features
including refrigerators with beverage chillers, Tempasure system, adaptive
defrost control and the industry's only U.S. produced bottom mount freezer
configuration; top load laundry equipment with stainless steel wash baskets and
dryer drums; Quartz halogen cooktops with ten-position, variable intensity
control systems for more even heating and the first compact commercial
convection microwave oven in North America.

         The Company's heating and air conditioning, refrigerator and microwave
oven, cooking appliance and laundry manufacturing facilities are the first U.S.
plants in their respective industries to be certified to ISO 9001, the most
stringent of the ISO 9000 international series of manufacturing quality
standards.
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                               ELECTRONICS SEGMENT

         Raytheon's principal business is the design, manufacture and servicing
of advanced electronic devices, equipment and systems for governmental and
commercial customers.

         Raytheon Electronic Systems (RES). RES produces the Patriot
ground-based air defense missile system, which is capable of simultaneously
tracking and intercepting enemy aircraft, cruise missiles, and tactical
ballistic missiles. In addition to the U.S., seven foreign nations have selected
Patriot as an integral part of their air defense systems, including Germany, The
Netherlands, Israel, Japan, Saudi Arabia, Kuwait, and the Republic of China
(Taiwan). Since the end of the Gulf War in 1991, Raytheon has received
approximately $3 billion in foreign orders for Patriot equipment and services.

         RES is the prime contractor for the Hawk ground-launched missile, which
is owned by 18 Allied nations in addition to the U.S. Recent major Hawk upgrade
contracts have been received from Spain, Saudi Arabia and Egypt.

         A joint venture of RES and Hughes Aircraft Company is one of two
contractors currently working on the program definition/validation phase of the
Medium Extended Air Defense System (MEADS)--a U.S./European program with
potential value in the billions of dollars. MEADS will provide U.S. and Allied
Forces with missile batteries, sensors, and command and control systems that
will move with and protect maneuver forces from observation and attack by enemy
air forces and tactical missiles. One contractor team will be selected in 1999
to continue the program.

         RES is a major developer of ground-based phased-array radars, including
the Ground-Based Radar (GBR) for the Theater High Altitude Area Defense (THAAD)
system, the U.S. Army's newest Theater Missile Defense Program.

         In 1995 Raytheon and Hughes Aircraft Company formed a joint venture
(Standard Missile Company) which is owned 50% by each partner. All orders for
Standard Missile are contracted with Standard Missile Company by the Navy and
subcontracted to Raytheon and Hughes. RES manufactures the U.S. Navy's Standard
Missile at its Bristol, Tennessee factory and was the design agent for the
next-generation Standard Missile-2 Block IV (Aegis-ER) which is now in low rate
production.

         RES is the prime contractor for the NATO Sea-Sparrow Surface to Air
Missile System (NSSMS) and produces the air and surface launched versions of the
Sparrow missile, the MK-48 Vertical Launch System and the MK-73/93 CWI
transmitters for both the U.S. and foreign Navies.

         RES manufactures the primary air-to-air missile for U.S. Air Force and
Navy fighter aircraft--the Advanced Medium Range Air-to-Air Missile (AMRAAM).

         RES is the prime contractor for the U.S. Army's Enhanced Fiber Optic
Guided Missile (EFOGM) demonstration program--a key part of the U.S. Army Rapid
Force Projection Initiative, which will provide rapidly deployable, lethal and
highly survivable technologies to the U.S. early entry forces.
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         RES produces a variety of shipboard radar systems for the Arleigh
Burke-class destroyers, such as the Aegis AN/SPY-1D transmitters and Mk 99 fire
control units. Nearly every U.S. Navy ship carries at least one Raytheon
radar/fire control system, which includes the Tartar, SPS-49, and Seasparrow
systems.

         RES is working on the engineering and manufacturing development of the
Joint Tactical Combat Training System (JTCTS), a joint U.S. Navy and Air Force
effort to develop and procure tactical training range systems configured for
mobile, fixed, and transportable applications for both shore-based and forward
deployed tactical training.

         RES builds military communications systems, including the Air Forces's
Milstar satellite communications terminals and the Navy's Extremely High
Frequency Satellite Communications Program (NESP) terminals. In 1996, RES was
selected to develop and produce the U.S. Army's Secure Mobile Antijam Reliable
Tactical Terminal (SMART-T) system, the Tri-Band Super High Frequency Tactical
Terminals for HMMWV variant (T3[H]), and the high data rate submarine terminal
(HDR) for the U.S. Navy.

         RES also builds a family of extended environment (E2) COTS computers
and workstations and in 1995 won a contract to replace the mission computer on
the Navy's E-2C surveillance aircraft using a Raytheon-developed Model 940
computer based on Digital Equipment Corporation's 64-bit Alpha chip technology.
The French AWACS will also utilize E2 COTS computers.

         In Command, Communications, Control, Computer and Intelligence (C4I),
RES is working on an Army contract to develop a high-speed intelligence
correlation system called MICOR and a program to monitor weapon effectiveness
known as the Joint Precision Strike Demonstration (JPSD).

         RES, through its UK subsidiary, Raytheon Cossor produces a full line of
IFF interrogators and transponders as well as military global positioning system
(GPS) receivers and nulling adaptive antennas. Raytheon Cossor is also a world
leader in manufacturing airport secondary surveillance radars.

         RES develops sonars, combat control systems and minehunting equipment
for submarines and ships in U.S. and allied fleets in addition to designing
unmanned underwater vehicles and laser sensors. Examples include the CCS Mk 2
submarine combat control system upgrade, the AN/SQQ-32 minehunting sonar system
and the Mk 30 Mod 2 training target system for antisubmarine warfare training.

         RES is part of a team that recently won a contract to design, develop,
integrate, and test the command, control, communications and intelligence (C3I)
sonar, combat control, and architecture subsystems for the U.S. Navy's
next-generation attack submarine--the New Attack Submarine or NSSN. In addition,
the GD Marine Bath Iron Works Raytheon SAIC team was one of three contractors
down-selected for the Phase II functional design effort for the Navy's Arsenal
Ship program.

         RES Engineering Laboratories perform applied research on advanced
materials, electro-optics, infrared detectors, digital technology and microwave
semiconductors. The laboratories are making important contributions in the areas
of advanced microwave and millimeter-wave components for radar and missile
guidance systems and military communications; flat panel field emission
displays; electronically steered optical phased array development; surface
acoustic wave stabilized oscillator technology; diamond coating technology; and
free-standing diamond plate development.
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         Raytheon E-Systems, Inc. Acquired in May 1995, Raytheon E-Systems
specializes in intelligence, reconnaissance and surveillance systems; command
and control; specialized aircraft maintenance and modification; guidance,
navigation and control, communications and data systems.

         Raytheon E-Systems' core business is focused on intelligence,
reconnaissance and surveillance. Many of these programs are classified,
involving the development or upgrading of sensors, platforms, ground processing
for and integration of complex systems. Raytheon E-Systems is an industry leader
in software development for highly complex information systems having developed
millions of lines of code that is currently operational. Raytheon E-Systems is
also a pioneer in the application of advanced high performance supercomputer
systems. In 1996 this unit was awarded a contract valued at approximately $170
million to develop and maintain a major shared resource center at the U.S. Army
Research Laboratory at Aberdeen Proving Ground in Maryland. The total contract
encompasses a suite of computers, software, development tools, training, and
user support. When completed, the Army Research Laboratory system will be one of
the single largest computing engines in the world. In 1994, E-Systems won major
P3-C airframe refurbishment contracts from the U.S. Navy and the Royal
Australian Air Force. The Australian contract covers upgrades to all mission
equipment and cockpit displays, communications and navigation systems and the
integration of new equipment. The U.S. Navy project is designed to extend the
operational life of its P-3C maritime aircraft fleet.

         During 1996, Raytheon acquired the aircraft modification and defense
electronics businesses of Chrysler Technologies. These operations are now part
of Raytheon E-Systems. The two Chrysler Technologies operations complement
Raytheon E-Systems existing programs, technologies, and customers. They will
supplement Raytheon E-Systems' expertise in engineering design and systems
integration, aircraft modification and flight testing, corrosion control on
large wide-body aircraft, and development and production of satellite
communications, secure communications and electronic warfare systems.

         In the area of Command, Communications, Control, Computer and
Intelligence (C4I) systems, Raytheon E-Systems was awarded a U.S. Navy contract
in 1994 for the Cooperative Engagement Capability program. This system will
network information from every ship in a battle group to extend perimeter
defenses and vastly improve reaction time. Raytheon E-Systems has a number of
other products in the C4I area including the Global Command and Control System
maintenance and technical support contract award in 1996 to Raytheon E-Systems
by Defense Information Systems Agency and a U.S. Navy contract for the E-6B
command post modification.

         Raytheon E-Systems designs and builds advanced electronic
countermeasures systems to protect U.S. and allied ships and planes against
enemy strikes. These systems include the AN/ALQ-184 airborne countermeasures pod
for the Air Force and AN/SLQ-32 shipboard jamming system for the Navy. Raytheon
E-Systems also has considerable capabilities in large scale image processing and
advanced signal processing.

         Commercial Initiatives. Raytheon has successfully expanded its defense
capabilities into commercial markets such as environmental monitoring, air
traffic control, transportation and data management.
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         A leader in the field of wide-area environmental surveillance, RES won
an international competition to develop and produce the System for the
Surveillance of the Amazon (SIVAM)--an environmental monitoring system that will
help Brazil protect natural resources, sustain economic growth and support
proper land use, conservation and development in the Amazon region. On March 14,
1997, Raytheon announced that the SIVAM contract had been signed by the
government of Brazil and that all financing agreements for the program had been
finalized. The system is based on an integrated network of telecommunications,
remote satellite sensing and imagery and ground-based and airborne sensors
controlled by regional and national coordination centers. Combining its
pioneering electronics technology and aviation expertise, Raytheon has developed
the Guardian airborne surveillance system. Using highly interactive surveillance
capabilities, the flight-proven Guardian performs extensive data gathering
activities for missions ranging from environmental control to drug interdiction.
Raytheon E-Systems' capabilities in environmental monitoring include expertise
ground-based image processing.

         Raytheon E-Systems has entered the commercial marketplace with
satellite imagery applications based on precision technologies previously
developed for military use. A strategic initiative in this area is Space
Imaging, Inc., a partnership among Raytheon E-Systems, Lockheed Martin
Corporation, Mitsubishi Corporation, and other investors. During 1996, Space
Imaging merged with EOSAT Company, which gives it the capability to sell
five-meter imagery Earth information from a constellation of satellites
including the Indian Remote Sensing Satellite. In December 1997, Space Imaging
plans to launch a satellite which will yield images with a resolution of one
meter.

         RES designs and installs air traffic control (ATC) and weather systems
at airports worldwide. Raytheon is the world's leading manufacturer and supplier
of air traffic control systems and radars. Some of the countries Raytheon is
providing ATC systems and radars for include The Netherlands, India, Norway,
Switzerland, Australia, Germany, Oman, Hong Kong, Jamaica, Cyprus, China, and
Taiwan. Raytheon is supplying the Royal Australian Air Force with a new defense
and air traffic system under a $124 million contract.

         RES recently won a contract valued at $619.9 million for the Digital
Airport Surveillance Radar (DASR) program--a joint procurement by the DOD for
the U.S. Air Force and Navy, and the Federal Aviation Administration. RES's
Raytheon Canada subsidiary is providing the primary surveillance radars for the
program.

         In September 1996, a team led by RES won the FAA/DOD Standard Terminal
Automation Replacement System (STARS) program, which is potentially worth $1
billion and will modernize and upgrade approximately 370 air traffic control
sites across the United States.

         Raytheon's Terminal Doppler Weather Radar (TDWR) system is being
installed at 42 sites across the U.S. and Puerto Rico, and the company in 1994
won its first international TDWR contract for the Hong Kong airport. TDWR uses
Doppler radar technology to warn air traffic controllers of sudden wind shifts,
such as microbursts, which have been blamed for numerous aircraft accidents,
particularly during takeoff or landing.


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         In partnership with the Regional Transportation Authority of
Northeastern Illinois, RES is developing a Personal Rapid Transit (PRT) system
for Rosemont, Illinois that will enable people to travel to their destinations
on demand and without intermediate stops. Raytheon has build a PRT test track at
RES's Marlborough, Massachusetts facility, and operational testing is ongoing.

         Raytheon E-Systems has strong capabilities in communications and data
management technologies, including data storage and retrieval systems; image
management and communications networks for medical applications; and the
development and maintenance of a nationwide computer network to catalog and
track student loans for the U.S. Department of Education.

         Raytheon  Electronics.  Raytheon  Electronics  consists of Raytheon
Marine Company,  Raytheon  Semiconductor,  Seiscor  Technologies,  Inc.,  
Raytheon Microelectronics and Switchcraft, Inc.

         Raytheon Marine supplies marine radars, depth sounders,
radiotelephones, autopilots, fish finders, ECDIS and navigation aids, GPS and
Loran receivers and other marine electronics under the Raytheon, Apelco and
Autohelm labels in the U.S. and abroad. Acquired in 1995, Raytheon Anschtz GmbH,
located in Kiel, Germany, is one of the world's leading manufacturers of gyro
compasses, autopilots, steering control systems, and integrated bridge systems
for the commercial and military marine market.

         In microelectronics and components Raytheon is developing the Main
Mission Antenna transceiver systems for the IRIDIUM global satellite
communications project, which is designed to provide voice, paging, data,
facsimile and location services anywhere on Earth. The antenna systems use
Raytheon Microelectronics' gallium arsenide monolithic microwave integrated
circuit ("MMIC") technology. Raytheon is also using its MMIC technology to
develop direct broadcast satellite television receivers, wireless local area
networks and next-generation digital cellular phones.

         Raytheon also produces a line of silicon semiconductor components --
specializing in multi-media and PC voltage regulators -- at its Semiconductor
Division. Raytheon provides a wide range of electronic components under the
Switchcraft label, including jacks and plugs, switches and connectors. Raytheon
designs and manufactures telephone transmission equipment, including
state-of-the-art digital loop-carrier equipment at its Seiscor Technologies
subsidiary.

         During the fourth quarter of 1995, Raytheon sold its D.C. Heath and
Company publishing division to Houghton Mifflin Company for $455 million.

         Financial information about Operations by Business Segments and
         Operations by Geographic Areas is contained on page 46 of Raytheon's
         1996 Annual Report to Stockholders and is incorporated herein by
         reference.

                              GOVERNMENT CONTRACTS

         The Company and various subsidiaries act as a prime contractor or major
subcontractor for many different Government programs including those that
involve the development and production of new or improved weapons or other types
of electronics systems or major components of such systems. Over its lifetime, a

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                                       11

program may be implemented by the award of many different individual contracts
and subcontracts. The funding of Government programs is subject to congressional
appropriations. Although multi-year contracts may be authorized in connection
with major procurements, Congress generally appropriates funds on a fiscal year
basis even though a program may continue for many years. Consequently, programs
are often only partially funded initially and additional funds are committed
only as Congress makes further appropriations. The Government is required to
adjust equitably a contract price for additions or reductions in scope or other
changes ordered by it.

         Generally, Government contracts are subject to oversight audits by
Government representatives, to profit and cost controls and limitations, and to
provisions permitting termination, in whole or in part, without prior notice at
the Government's convenience upon the payment of compensation only for work done
and commitments made at the time of termination. In the event of termination,
the contractor will receive some allowance for profit on the work performed. The
right to terminate for convenience has not had any significant effect upon
Raytheon's business in light of its total Government business.

         The Company's Government business is performed under both cost
reimbursement and fixed price prime contracts and subcontracts. Cost
reimbursement contracts provide for the reimbursement of allowable costs plus
the payment of a fee. These contracts fall into three basic types: (i) cost plus
fixed fee contracts which provide for the payment of a fixed fee irrespective of
the final cost of performance; (ii) cost plus incentive fee contracts which
provide for increases or decreases in the fee, within specified limits, based
upon actual results as compared to contractual targets relating to such factors
as cost, performance and delivery schedule; and (iii) cost plus award fee
contracts which provide for the payment of an award fee determined in the
discretion of the customer based upon the performance of the contractor against
pre-established criteria. Under cost reimbursement type contracts, Raytheon is
reimbursed periodically for allowable costs and is paid a portion of the fee
based on contract progress. Some costs incident to performing contracts have
been made partially or wholly unallowable by statute or regulation. Examples are
charitable contributions, travel costs in excess of government rates and certain
litigation defense costs.

         The Company's fixed price contracts are either firm fixed price
contracts or fixed price incentive contracts. Under firm fixed price contracts,
Raytheon agrees to perform the contract for a fixed price and as a result
benefits from cost savings and carries the burden of cost overruns. Under fixed
price incentive contracts, Raytheon shares with the Government savings accrued
from contracts performed for less than target costs and costs incurred in excess
of targets up to a negotiated ceiling price (which is higher than the target
cost) and carries the entire burden of costs exceeding the negotiated ceiling
price. Under such incentive contracts, the Company's profit may also be adjusted
up or down depending upon whether specified performance objectives are met.
Under firm fixed price and fixed price incentive type contracts, the Company
usually receives progress payments monthly from the Government generally in
amounts equaling 80% of costs incurred under the contract. The remaining amount,
including profits or incentive fees, is billed upon delivery and final
acceptance of end items under the contract.
<PAGE>
                                       12

         The Company's Government business is subject to specific procurement
regulations and a variety of socio-economic and other requirements. Failure to
comply with such regulations and requirements could lead to suspension or
debarment, for cause, from Government contracting or subcontracting for a period
of time. Among the causes for debarment are violations of various statutes,
including those related to employment practices, the protection of the
environment, the accuracy of records and the recording of costs. The Company has
not, at any time, been debarred or suspended.

         Under many Government contracts, the Company is required to maintain
facility and personnel security clearances complying with DOD requirements.

         Companies which are engaged in supplying defense-related equipment to
the Government are subject to certain business risks some of which are peculiar
to that industry. Among these are: the cost of obtaining trained and skilled
employees; the uncertainty and instability of prices for raw materials and
supplies; the problems associated with advanced designs, which may result in
unforeseen technological difficulties and cost overruns; and the intense
competition and the constant necessity for improvement in facilities and
personnel training. Sales to the Government may be affected by changes in
procurement policies, budget considerations, changing concepts of national
defense, political developments abroad and other factors.

         As a result of the 1985 Balanced Budget and Emergency Deficit Reduction
Control Act, the federal deficit and changing world order conditions, DOD
budgets have been subject to increasing pressure resulting in an uncertainty as
to the future effects of DOD budget cuts. Raytheon has, nonetheless, maintained
a solid foundation of tactical defense systems which meet the needs of the
United States and its allies, as well as serving a broad government program base
and wide range of commercial electronics businesses. These factors lead
management to believe that there is high probability of continuation of
Raytheon's current major tactical defense programs.

         In 1995 Raytheon initiated changes in its defense business in
Massachusetts to achieve $600 million in cost savings to enable it to remain
competitive in defense manufacturing in the state with companies based in
lower-cost states. Raytheon worked with local unions to achieve cost controls
and enhance productivity; it worked with Massachusetts lawmakers to enact tax
reduction legislation for manufacturing firms in the state; and it worked with
utility companies to cut electricity costs in the state.

                                     BACKLOG

         The Company's backlog of orders at December 31, 1996 was $12.066
billion compared with $10.551 billion at the end of 1995. The 1996 amount
includes funded backlog of $5.637 billion from the Government compared with
$5.142 billion at the end of 1995. Normally, the Government funds its major
programs only to the dollar level appropriated annually by Congress, even though
the total estimated program values are considerably greater. Accordingly, the
Company's Government funded backlog represents only that amount which has been
appropriated and against which the Company can be reimbursed for work performed.


<PAGE>
                                       13

        Approximately $2.231 billion of the overall backlog figure represents
the unperformed portion of multi-year direct orders from foreign governments, of
which $1.180 billion is for air defense systems or components thereof and
related services and $1.051 billion is for the SIVAM environmental monitoring
system. Approximately $2.073 billion of the overall backlog represents
non-government foreign backlog.

         Backlog in the Engineering and Construction segment was $3.565 billion
at the end of 1996 compared with $2.240 billion at the end of 1995. The increase
was due primarily to an increase in international turnkey energy projects.
Design and construction contracts in this segment typically take from eighteen
months to several years to perform.

         Aircraft  segment  backlog  was $1.163  billion at the end of 1996 
versus $836  million at the end of 1995.  The increase was primarily due to the
receipt of orders for Premier I.

         Approximately $5.129 billion of the $12.066 billion 1996 year-end
backlog is not expected to be filled during the following twelve months.

                            RESEARCH AND DEVELOPMENT

         During 1996, Raytheon derived net sales of $1,496 million ($982 million
in 1995 and $450 million in 1994) pursuant to Government contracts for research
and development. In addition, during 1996 Raytheon expended $323.3 million on
research and development efforts compared with $315.6 million in 1995 and $269.6
million in 1994. These expenditures principally have been for product
development for the Government and for aircraft products.

                                    SUPPLIERS

         Delivery of raw materials and supplies to Raytheon is generally
satisfactory. Raytheon is sometimes dependent, for a variety of reasons, upon
sole-source suppliers for procurement requirements. However, Raytheon has
experienced no significant difficulties in meeting production and delivery
obligations because of delays in delivery or reliance on such suppliers.

                                   COMPETITION

         The military and commercial industries in which Raytheon operates are
highly competitive. Raytheon's competitors range from highly resourceful small
concerns, which engineer and produce specialized items, to large, diversified
firms.

         In the Engineering and Construction segment it is estimated that about
15 firms compete for major business opportunities worldwide. Competition is
based primarily upon technical superiority, project experience and price. The
ability to arrange or otherwise provide financing to customers is sometimes
significant in attracting or retaining clients.

         Competition in the Aircraft segment comes from a number of domestic and
foreign jet, turboprop and piston aircraft manufacturers. Principal elements of
competition in the industry are price, financing, operating costs, reliability,
cabin size and comfort, product quality, speed and service support.
<PAGE>
                                       14

         In the Major Appliances segment, quality, warranty, price, advertising
and marketing are all competitive factors. Approximately 34 firms compete with
Raytheon in the various major appliance segments. Of these, Raytheon considers
four firms to be significant competitors in Home Appliances, six firms in
Commercial Laundry, eight firms in Heating and Air Conditioning and two firms in
Commercial Cooking.

         The Electronics segment is a direct participant in most major areas of
development in the defense, space, information gathering, data reduction and
automation fields. Technical superiority and reputation, price, delivery
schedules, financing and reliability are principal competitive factors
considered by electronics customers. About half of the 30 largest defense
contractors in the United States are competitors in the Electronics segment.

                              PATENTS AND LICENSES

         Raytheon has long been an innovative leader in the development of new
products and manufacturing technologies. Raytheon and its subsidiaries own a
large number of United States and foreign patents and patent applications as
well as trademark, copyright and chip mask work registrations which are
necessary and contribute significantly to the preservation of the Company's
strong competitive position in the market. In certain instances, Raytheon has
augmented its technology base by licensing the proprietary intellectual property
of others.

         Raytheon's patent position and intellectual property portfolio is
deemed adequate for the conduct of its businesses. It is Raytheon's policy to
enforce its own intellectual property rights and to respect the rights of
others. Incidental to the normal course of business, infringement claims may
arise or may be threatened both by and against Raytheon. In the opinion of
management, these claims will not have a material adverse affect on the
Company's operations.

                                   EMPLOYMENT

         As of December 31, 1996, Raytheon had 75,300 employees compared with
73,200 employees at the end of 1995. The increase is primarily due to the
acquisitions of Chrysler Technologies and Rust Engineering, partially offset by
reductions in the defense electronics segment and the sale of Xyplex.
Subsidiaries of Raytheon Engineers & Constructors International, Inc. and
certain other subsidiaries have craft employees engaged for individual projects
not included in Raytheon's employee count.

         Raytheon considers its employee relations to be satisfactory. Raytheon
has, for the most part, successfully negotiated labor agreements without
significant work stoppages, with the exception of a nine week strike that
occurred during the summer of 1996 at the Cedarapids, Inc. facility located in
Cedar Rapids, Iowa. Negotiations with the primary union representing Raytheon
Electronic Systems employees in Massachusetts occurred in the summer and fall of
1995. Due to the dramatic decline in defense procurement and the Company's need
to achieve a competitive position in this increasingly cost sensitive market,
the Company sought and received significant changes to the terms and conditions
of the contract, including a three-year wage freeze, work rule changes and
benefit changes. Negotiations for a five year agreement with the hourly
employees represented by the International Association of Machinists (IAM) at
Raytheon Aircraft in Wichita and Salina, Kansas were successfully completed in
1996.
<PAGE>
                                       15

                                  FOREIGN SALES

         Of total sales, Raytheon's sales to customers outside the United States
were 28%, 28% and 26% in 1996, 1995 and 1994, respectively. These sales were
principally in the fields of air defense systems, air traffic control systems,
sonar systems, aircraft products, petrochemical power and industrial plant
design and construction, electronic equipment, computer software and systems,
personnel training, equipment maintenance and microwave communication. Foreign
working capital requirements generally are financed in the countries concerned.
Sales and income from international operations are subject to changes in
currency values, domestic and foreign government policies (including
requirements to expend a portion of program funds in-country) and regulations,
embargoes and international hostilities. Exchange restrictions imposed by
various countries could restrict the transfer of funds between countries and
between Raytheon and its subsidiaries. Raytheon generally has been able to
protect itself against most undue risks through insurance, foreign exchange
contracts, contract provisions, government guarantees or progress payments.

         Raytheon utilizes the services of sales representatives and
distributors in connection with foreign sales. Normally representatives are paid
commissions and distributors are granted resale discounts in return for services
rendered.

         Licenses are required from Government agencies under the Export
Administration Act, the Trading with the Enemy Act of 1917 and the Arms Export
Control Act of 1976 (formerly the Foreign Military Sales Act) for export from
the United States of many of Raytheon's products. In the case of certain sales
of defense equipment and services to foreign governments, the Government's
Executive Branch must notify Congress at least 30 days prior to authorizing such
sales. During that time, Congress may take action to block the proposed sale.

     FACTORS THAT COULD AFFECT FUTURE RESULTS -- FORWARD LOOKING STATEMENTS

         Statements in this filing which are not historical facts are forward
looking statements under the provisions of the Private Securities Litigation
Reform Act of 1995. All forward looking statements involve risks and
uncertainties. The Company wishes to caution readers that the following
important factors, among others, in some cases have affected, and in the future
could affect, the Company's actual results and could cause its actual results in
fiscal 1997 and beyond to differ materially from those expressed in any forward
looking statements made by, or on behalf of, the Company.

         Important factors that could cause actual results to differ materially
include but are not limited to (i) the effect of global economic conditions,
(ii) the success of and investment in new product development, (iii) product
demand and market acceptance, (iv) the timing of new business awards, (v) the
introduction of competing products or technologies by competitors, (vi) the
successful conversion of defense products and technology to commercially viable
products, (vii) the ability to protect proprietary information and technology or
to obtain necessary licenses on commercially reasonable terms, (viii) obtaining
and retaining skilled workers, (ix) the ability to obtain and maintain a strong
supplier base and the capacity to meet product demand, (x) the trade policies of
foreign governments and (xi) competitive pressures and other risks identified
below by business segment.
<PAGE>
                                       16

         Electronics Segment. In the domestic defense electronics segment,
important factors that could cause actual results to differ materially include,
in addition to those factors described in the preceding paragraph, (i) the
uncertainties surrounding Congressional appropriations and/or Department of
Defense funding, (ii) contract provisions for price determination, profit and
cost controls and limitations and audit, (iii) the ability of government
customers to terminate existing contracts, wholly or partially, for their own
convenience with a requirement to pay only for work performed or committed with
a reasonable allowance for profit, (iv) advanced design problems and associated
technological difficulties with the potential for cost overruns, (v) changes in
procurement policies, (vi) the changing needs for and changes in the type of
weapon systems to be procured, (vii) political developments domestically and
internationally and (viii) changes in the competitive landscape due to the
consolidation of the U.S. or global defense industry.

         With respect to the international defense electronics market, important
factors that could cause actual results to differ materially include, in
addition to those noted above, (i) delays in placing orders, (ii) the ability of
foreign customers to finance purchases, (iii) uncertainties and restrictions
concerning the availability of funding credit or guarantees, (iv) changing
military and political alliances, (v) U.S. or foreign export controls and trade
restrictions, (vi) government policies with respect to restrictions on doing
business with certain countries, (vii) governmental industrial cooperation
requirements, (viii) foreign exchange risks, (ix) increased international
competition, (x) the adequacy and availability of transportation, (xi) the
complexity and necessity of using foreign representatives and consultants and
(xii) the uncertainty of complying with the laws of specific countries and of
U.S. laws affecting the activities of U.S. companies abroad.

         In the commercial electronics segment, important factors that may cause
actual results to differ materially include, in addition to those noted above,
(i) product demand, including continued expansion of the satellite
telecommunications and telecommunications systems markets, (ii) consumer
spending patterns affecting recreational boat sales and favorable economic
conditions for commercial marine product sales, (iii) consumer demand for PC's
and audio entertainment components and (iv) the successful introduction of new
products, including the multiple Wireless LAN Systems.

         Engineering and Construction Segment. In the engineering and
construction segment, important factors that could cause actual results to
differ materially include, in addition to those noted above, (i) the effects of
global, regional and country specific economic conditions due to its increasing
international backlog, (ii) performance risks for existing and future contracts,
(iii) conditions in the capital markets and the availability of project
financing, (iv) international political conditions and (v) the timing of
contract receipt and funding.

         Aircraft Segment. In the aircraft segment, important factors that could
cause actual results to differ materially include, in addition to those noted
above, (i) market perceptions of and government regulations affecting regional
aircraft, (ii) product availability for the Hawker 800XP as a result of the line
transfer from the U.K. to the U.S., (iii) price pressures within the market,
(iv) the ability to meet scheduled timetables for the introduction of new
products, (v) delays in U.S. Government export approvals and (vi) third party
financing availability.
<PAGE>
                                       17

         Appliances Segment. In the appliance segment, important factors that
could cause actual results to differ materially include, in addition to those
noted above, (i) modifications to actual purchases under agreement, (ii) weather
conditions that may affect seasonal product demand, (iii) the effect of
increasing U.S. Department of Energy regulations and of federal and state
regulations regarding the protection of the environment, (iv) the effect of
lower consumer demand fueled by higher interest rates and lower disposable
income and (v) given the Company's announced intention to evaluate strategic
alternatives regarding its appliance business, including possible divestiture,
the continued ability of the appliance group to attract and maintain key
employees and to maintain its customer base.

         Acquisitions. In January 1997, the Company entered into definitive
agreements to acquire the defense systems and electronics business of Texas
Instruments Incorporated and to bring about the merger of the Company with the
defense business of Hughes Electronics Corporation. These transactions will
require, among other things, integration of the TI and Hughes defense
organizations, business infrastructure and products with those of the Company in
a way that enhances the performance of the combined businesses. The challenges
posed by these transactions include the integration of numerous geographically
separated manufacturing facilities and research and development centers. The
success of this transition to an integrated entity will be significantly
influenced by the Company's ability to retain key employees, to integrate
differing management structures and to realize anticipated cost synergies, all
of which will require significant management time and resources.

Item 2.  Properties

         The Company and its subsidiaries operate in a number of plants,
laboratories, warehouses and office facilities in the United States and abroad.

         At December 31, 1996, the Company utilized approximately 38.4 million
square feet of floor space in manufacturing, engineering, research,
administrative, sales and warehouses, approximately 96% of which was located in
the United States. Of such total, approximately 51% was owned, approximately 43%
was leased and approximately 6% was made available under facilities contracts
for use in the performance of United States Government contracts. At December
31, 1996 the Company had approximately 1.3 million square feet of additional
floor space that was not in use, including approximately 1.2 million square feet
in Company-owned facilities. There are no major encumbrances on any of the
Company's plants or equipment other than financing arrangements which in the
aggregate are not material. In the opinion of management, the Company's
properties have been well maintained, are in sound operating condition and
contain all equipment and facilities necessary to operate at present levels. In
connection with the restructuring plan announced in March 1994, the Company has
disposed and will continue to dispose of certain facilities.

         A summary of the utilized floor space at December 31, 1996, by business
segment, follows:
                       (in square feet with 000's omitted)

                               Leased         Owned   Gov't Owned       TOTAL

Electronics                    7,516          10,025     1,905          19,446
Engineering &
   Construction                3,364           1,169       360           4,893
Aircraft                       3,149           3,860         0           7,009
Appliances                     2,153           4,571         0           6,724
Corporate (includes              156             206         0             362
international sales offices)  ------          ------     -----          ------
         TOTAL                16,338          19,831     2,265          38,434
<PAGE>
                                       18

         Information regarding the effect of compliance with environmental
protection requirements and the resolution of environmental claims against the
Company and its operations is contained in Management's Discussion and Analysis
of Financial Condition and Results of Operations on pages 41 through 45 of
Raytheon Company's Annual Report to Stockholders for the year ended December 31,
1996 and is incorporated herein by reference. See also Item 3, Legal
Proceedings, immediately below.

Item 3.  Legal Proceedings

         The Company is involved in various stages of investigation and cleanup
relative to remediation of various sites. All appropriate costs incurred in
connection therewith have been expensed. Due to the complexity of environmental
laws and regulations, the varying costs and effectiveness of alternative cleanup
methods and technologies, the uncertainty of insurance coverage and the
unresolved extent of the Company's responsibility, it is difficult to determine
the ultimate outcome of these matters. However, in the opinion of management,
any liability will not have a material effect on the Company's financial
position, liquidity or results of operations after giving effect to provisions
already recorded.

         Accidents involving personal injuries and property damage occur in
general aviation travel. When permitted by appropriate government agencies,
Raytheon Aircraft investigates accidents related to its products involving
fatalities or serious injuries. Through a relationship with FlightSafety
International, Raytheon Aircraft provides initial and recurrent pilot and
maintenance training services to reduce the frequency of accidents involving its
products.

         Raytheon Aircraft is a defendant in a number of product liability
lawsuits which allege personal injury and property damage and seek substantial
recoveries including, in some cases, punitive and exemplary damages. Raytheon
Aircraft maintains partial insurance coverage against such claims and maintains
a level of uninsured risk determined by management to be prudent. (See Note J to
Raytheon's Financial Statements for the years ended December 31, 1996, 1995 and
1994.)

         The insurance policies for product liability coverage held by Raytheon
Aircraft do not exclude punitive damages, and it is the position of Raytheon
Aircraft and its counsel that punitive damage claims are therefore covered.
Historically, the defense of punitive damage claims has been undertaken and paid
by insurance carriers. Under the law of some states, however, insurers are not
required to respond to judgments for punitive damages. Nevertheless, to date no
judgments for punitive damages have been sustained.

         Defense contractors are subject to many levels of audit and
investigation. Agencies which oversee contract performance include: the Defense
Contract Audit Agency, the Department of Defense Inspector General, the General
Accounting Office, the Department of Justice and Congressional Committees. The
Department of Justice from time to time has convened grand juries to investigate
possible irregularities by the Company in governmental contracting.
<PAGE>
                                       19

         Various claims and legal proceedings generally incidental to the normal
course of business are pending or threatened against the Company. While the
Company cannot predict the outcome of these matters, in the opinion of
management, any liability arising from them will not have a material effect on
the Company's financial position, liquidity or results of operations after
giving effect to provisions already recorded.

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

         Not Applicable.
                                    PART II

Item 5.  Market For Registrant's Common Equity and Related Stockholder Matters

         This information is contained in the Annual Report to Stockholders for
 the year ended December 31, 1996 on page 1, on page 47 under the caption
"Quarterly Financial Data" and on the back cover and is incorporated herein by 
reference.

Item 6.  Selected Financial Data

         This  information is included in the "Ten Year Statistical Summary"
contained in the Annual Report to Stockholders for the year ended December 31,
1996 on pages 48 and 49 and is incorporated herein by reference.

Item 7.  Management's Discussion and Analysis of Financial Condition and 
         Results of Operations

         This  information is contained in the Annual Report to Stockholders for
the year ended December 31, 1996 on pages 41 through 45 and is incorporated
herein by reference.

Item 8.  Financial Statements and Supplemental Data

         Selected quarterly financial data and the financial statements and
supplementary data of the Registrant are contained in the Annual Report to
Stockholders for the year ended December 31, 1996 on page 47 and pages 50
through 66, respectively, and are incorporated herein by reference. Schedules
required under Regulation S-X are filed as "Financial Statement Schedules"
pursuant to Item 14 hereof.

Item 9.  Changes in and Disagreements with Accountants and Financial Disclosure

         None.
                                   PART III

Item 10. Directors and Executive Officers of the Registrant

Board of Directors

         The Board of Directors met sixteen times during 1996. All directors
attended at least 75% of the aggregate number of meetings of the Board of
Directors and the Committees on which they served. Overall attendance at such
meetings was approximately 95%.
<PAGE>
                                       20

         The Audit Committee of the Board of Directors consists of Francis H.
Burr, Richard D. Hill, L. Dennis Kozlowski and James N. Land, Jr. The Audit
Committee met three times during 1996. The Committee's duties are to consult
with and make inquiry of the Company's outside auditors from time to time; to
review procedures followed and reports submitted by such outside auditors; to
make such further investigations of the Company's financial affairs as it deems
appropriate; to report to the Board of Directors on the results of such
consultation and investigation; and to recommend to the Board of Directors the
engagement of the Company's outside auditors.

         The Compensation Committee of the Board of Directors consists of 
Charles F. Adams, Barbara B. Hauptfuhrer, Richard D. Hill, Warren B. Rudman,
Joseph J. Sisco and Alfred M. Zeien.  The Compensation Committee met twelve
times during 1996. The  Committee's duties are to develop, review and recommend
to the Board of Directors compensation programs for the executive officers of 
the Company.

         The Executive Committee of the Board of Directors consists of Charles
F. Adams, Francis H. Burr, Ferdinand Colloredo-Mansfeld, Thomas L. Phillips and
Dennis J. Picard.  The Executive Committee met seven times during 1996.  The 
Committee is empowered to act for the full Board during intervals between
Board meetings, with the exception of certain matters that by law may not be 
delegated.

     The Planning and Nominating Committee of the Board of Directors consists of
Charles F. Adams, Francis H. Burr, Theodore L. Eliot, Jr., John R. Galvin, James
N. Land, Jr., Thomas L. Phillips, Warren B. Rudman and Joseph J. Sisco. The
Planning and Nominating Committee met twice during 1996. The Committee's duties
are to study strategies for achieving corporate goals, to propose to the Board
of Directors candidates for election to the Board and to make other
recommendations relating to Board membership. The Planning and Nominating
Committee will consider nominees recommended by stockholders. No formal
procedures are required to be followed by stockholders in submitting such
recommendations.

         During 1996, each Board member, other than Messrs. Picard and Lawson,
was paid a quarterly retainer of $6,500 and, in addition, was paid a fee of
$1,000 for attendance at each meeting of the Board and each committee meeting
other than telephonic meetings and committee meetings of less than two hours'
duration held on the day of full Board meetings for which the fee was $500.
Pursuant to the Company's Deferral Plan for Directors (the "Deferral Plan"),
adopted by the Board on November 26, 1996, beginning in 1997, directors may
defer receipt of their quarterly retainer and/or meeting fees until retirement
from the Board. Deferred payments accrue interest (payable by the Company) at
the same prescribed government rate applicable to compensation deferred by
employees under the Company's Voluntary Deferment Plan.

         Prior to adoption of the Deferral Plan, directors not eligible for
benefits under any Company-sponsored pension plan, who have served on the Board
for at least five years, and who complied with a prescribed non-competition
agreement, were entitled to a monthly payment equal to one-twelfth the amount of
the director's annual retainer in effect at the time of the director's
retirement from the Board under the Raytheon Company Retirement Plan for
Directors. Payments under the plan terminated upon the earlier of the death of
the retiree and his/her spouse or the expiration of fifteen consecutive years
from the initial payment under the plan.
<PAGE>
                                       21

         Pursuant to the Deferral Plan, benefits to be provided to all current
and future directors under the Retirement Plan for Directors have been
terminated. In connection with this termination, the present value of each
current director's pension benefit was converted into shares of the Company's
Common Stock. In accordance with the terms of the Deferral Plan, these shares
are held in trust for the benefit of the individual directors until their
qualified retirement from the Board. The shares issued to the current directors
are included in the Beneficial Ownership Table set forth in Part III, Item 12
below and each director has the power to vote these shares at any meeting of the
stockholders of the Company.

Executive Officers of the Registrant

Gail P.  Anderson:  Vice  President - Human  Resources  since December  1994. 
Prior to assuming his present  position Mr.  Anderson was Vice President - Human
Resources, Phillips Petroleum Company from 1986.  Age: 54

Shay D. Assad:  Vice President - Contracts since July 1994.  Prior to assuming
his present position Mr. Assad was Manager-Contracts,  Missile Systems Division
from 1985.  Age: 46

     Renso L. Caporali: Senior Vice President Engineering and Business
Development since January 1997. Prior to assuming his present position Mr.
Caporali was Senior Vice President - Government and Commercial Marketing since
April 1995 and Chairman and Chief Executive Officer of the Grumman Corporation
from 1991. Age: 63

     Philip W. Cheney: Vice President and Group Executive - Commercial
Electronics since July 1994. Prior to assuming his present position Dr. Cheney
was Vice President - Engineering from February 1990. Age: 61

     Kenneth H. Colburn: Vice President - Project and International Finance
since January 1995. Prior to assuming his present position Mr. Colburn was
Managing Director-Investment Banking Department-East Coast Group, CS First
Boston Corporation from January 1991. Age: 45

     Peter R. D'Angelo: Executive Vice President, Chief Financial Officer and
Controller since March 1995. Prior to assuming his present position Mr. D'Angelo
was Vice President, Chief Financial Officer and Controller from January 1995;
Vice President and Corporate Controller from 1992 and Controller - Missile
Systems Division from 1984. Age: 58

Herbert Deitcher: Senior Vice President-Treasurer since November 1989.  Age: 63

     David S. Dwelley: Vice President - Strategic Business Development since
April 1991. Prior to assuming his present position Mr. Dwelley was Vice
President and President of Raytheon Europe Limited from 1989. Age: 57

     Michele C. Heid: Vice President - Investor Relations since September 1995.
Prior to assuming her present position Ms. Heid was Vice President - Investor
Relations & Strategic Planning, Cummins Engine Company from 1993 and Vice
President - Investor Relations, Cummins Engine Company from 1991. Age: 42
<PAGE>
                                       22

     Christoph L. Hoffmann: Executive Vice President - Law, Corporate
Administration, and Secretary since March 1995. Prior to assuming his present
position Mr. Hoffmann was Senior Vice President - Law, Human Resources and
Corporate Administration, and Secretary from February 1994; Vice President,
Secretary and General Counsel from July 1991, Vice President from April 1991 and
Senior Vice President, General Counsel and Secretary of Pneumo Abex Corporation
from 1986. Age: 52

     Thomas D. Hyde: Vice President and General Counsel since February 1994.
Prior to assuming his present position Mr. Hyde was Assistant General Counsel
from August 1992; Senior Vice President, General Counsel and Chief Financial
Officer of MNC Financial Inc. Special Assets Bank from 1991; and Vice President,
Finance of Manville Sales Corporation from 1988. Age: 48

     A. Lowell Lawson: Executive Vice President since May 1995. Chairman and
Chief Executive Officer of E-Systems, Inc. since August 1994. Mr. Lawson was
President of E-Systems from 1989. Age: 59

     Robert S. McWade: Vice President - Corporate Affairs and Communications
since January 1997. Prior to assuming his present position Mr. McWade was Vice
President - Corporate Affairs since February 1996; Director, Corporate
Communications, Textron, Inc. from September 1994; and Director, Corporate
Relations, Bank of Boston from 1988. Age: 40

     Charles Q. Miller: Executive Vice President and Chairman and Chief
Executive Officer of Raytheon Engineers & Constructors International, Inc. since
March 1995. Prior to assuming his present position Mr. Miller was Senior Vice
President and Group Executive and Chairman and Chief Executive Officer of
Raytheon Engineers & Constructors International, Inc. from March 1993; and
President, United Engineers & Constructors, Inc. from 1990. Age: 51 

     Dennis J. Picard: Director since 1989 and Chairman and Chief Executive
Officer since March 1991. Prior to assuming his present position Mr. Picard was
President from 1989. Age: 64

     Robert A. Skelly: Vice President - Assistant to the Executive Office. Prior
to assuming his present position Mr. Skelly was Vice President - Administration,
Environmental Quality and Procurement from September 1992 and Vice President -
Public and Financial Relations from January 1991. Age: 54

     Robert L. Swam: Executive Vice President and Chairman and Chief Executive
Officer of Raytheon Appliances, Inc. since March 1995. Prior to assuming his
present position Mr. Swam was Senior Vice President and Group Executive -
Appliance Group from January 1992 and an independent consultant from 1989. Age:
56

     William H. Swanson: Executive Vice President and General Manager - Raytheon
Electronic Systems Division since March 1995. Prior to assuming his present
position Mr. Swanson was Senior Vice President and General Manager - Missile
Systems Division from 1990. Age: 48

     Arthur E. Wegner: Executive Vice President and Chairman and Chief Executive
Officer of Raytheon Aircraft Company since March 1995. Prior to assuming his
present position Mr. Wegner was Senior Vice President and Chairman and Chief
Executive Officer of Raytheon Aircraft from July 1993 and Executive Vice
President and President of the Aerospace/Defense Sector of United Technologies
Corporation from 1989. Age: 59
<PAGE>
                                       23

         Each executive officer was elected by the Board of Directors to serve
for a term of one year and until his or her successor is elected and qualified
or until his or her earlier removal, resignation or death.

Section 16(a) Beneficial Ownership Reporting Compliance

         Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers, and persons who own
more than ten percent of the Company's Common Stock, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and the New York Stock Exchange. Directors, officers and ten-percent
shareholders are also required to furnish the Company with copies of all Section
16(a) forms they file.

         To the Company's knowledge, based solely on a review of such forms
furnished to the Company and written representations that no other reports were
required, the Company believes that during the fiscal year ended December 31,
1996 all such Section 16(a) filing requirements were complied with except that
one filing covering one transaction by Thomas D. Hyde, Vice President and
General Counsel of the Company, was filed late.


Item 11. Executive Compensation

         Set forth below is information concerning the annual and long-term
compensation for the Company's chief executive officer and the four other most
highly compensated executive officers for the fiscal years ending December 31,
1996, 1995 and 1994.
<PAGE>
                                       24
<TABLE>
<CAPTION>
                                  Summary Compensation Table
                                                       Long-Term 
                         Annual Compensation        Compensation Awards
                         -------------------        -------------------
<S>            <C>      <C>          <C>         <C>           <C>          <C>
                                                 Restricted                 All Other
Name and                Salary(1)     Bonus     Stock Awards(2) Options   Compensation(3)
Principal
Position       Year       ($)          ($)           ($)         (#)            ($)
   (a)         (b)        (c)          (d)           (f)         (g)            (i)

Dennis J. 
Picard         1996   $1,015,002    $1,870,000(4)        0    270,000(5)     $714,222
Chairman of    1995   $  999,996    $  870,000           0    220,000        $ 12,906
the Board      1994   $  965,754    $  870,000           0    130,000        $ 12,507
and Chief
Executive      
Officer

A. Lowell      1996   $  575,000    $  450,000            0    40,000        $  5,293
Lawson         1995   $  573,908(6) $  425,000   $1,560,000         0        $  7,872
Executive Vice 1994        N/A           N/A         N/A         N/A             N/A
President,
Chairman and      
CEO - Raytheon
E-Systems, Inc.

William H.     1996   $  419,520    $  305,000            0    40,000        $  6,932
Swanson        1995   $  419,520    $  290,000            0    30,000        $  6,787
Executive Vice 1994   $  411,450    $  290,000            0    20,000        $  7,068
President and         
General 
Manager-Raytheon
Electronic
Systems

<PAGE>
                                       25

Arthur E.      1996   $  403,464    $  255,000            0    40,000        $  9,233
Wegner         1995   $  397,500    $  240,000            0    40,000        $  8,931   
Executive Vice 1994   $  386,250    $  175,000   $  648,750    40,000        $332,204      
President and        
Chairman and    
CEO-Raytheon 
Aircraft Company

Christoph L.   1996   $  385,194    $  250,000            0    30,000        $  7,415
Hoffmann       1995   $  379,500    $  235,000            0    30,000        $  7,203   
Executive Vice 1994      362,250    $  225,000    $  324,375   28,000        $  7,392
President and   
Secretary                     
</TABLE>
<PAGE>
                                       26

(1) The amounts reported in column (c) for 1995 reflect salary adjustments in
the course of the normal compensation review cycle effective July 1, 1994
(except for Mr. Lawson, who was not an employee of the Company at that time).
Pursuant to the Company's announced wage freeze for 1995, the salaries for Mr.
Picard and the named executive officers (other than Mr. Lawson) in effect for
1995 remained frozen at the levels approved on July 1, 1994. Therefore, there
was no increase for the salary year July, 1994 to July, 1995. Any increase shown
in the 1995 amounts from 1994 is the result of the difference between the salary
year and the calendar year.

(2) The executive is not entitled to the cash amount shown in column (f) in the
year the restricted stock award is made. The award vests over several years and
is subject to the executive remaining employed by the Company. Dividends are
paid on the restricted stock reported in column (f).

The number and value at closing price on December 31, 1996 of the aggregate
restricted stock holdings (over which the executive has voting but no investment
power) of each of the named executives is as follows: Mr. Picard -- 66,668
shares, $3,208,398; Mr. Lawson -- 40,000 shares, $1,925,000; Mr. Swanson --
19,200 shares, $924,000; Mr. Wegner -- 24,000 shares, $1,155,000; Mr. Hoffmann
-- 22,000 shares, $1,058,750.

Mr. Hoffmann's 1994 restricted stock grant shown in column (f) consists of a
total of 10,000 shares awarded on June 22, 1994. Shares subject to the award
vest pro rata over a five year period beginning on the first anniversary of the
award date. Accordingly, 4,000 shares have vested to date.

Mr. Wegner's 1994 restricted stock grant shown in column (f) consists of a total
of 20,000 shares awarded on June 22, 1994. Shares subject to the award vest pro
rata over a five year period beginning on the first anniversary of the award
date. Accordingly, 8,000 shares have vested to date

(3) For 1996, the amounts in column (i) include: (a) the value of life insurance
premiums paid by the Company (Mr. Picard -- $8,841; Mr. Lawson -- $2,162; Mr.
Swanson -- $1,551; Mr. Wegner -- $3,852; and Mr. Hoffmann -- $2,034); (b)
Company contributions of $881 for each executive under the Company's Stock
Ownership Plan; and (c) Company contributions of $4,500 for each executive other
than Mr. Lawson under the Company's Savings and Investment Plan. For Mr. Lawson,
in addition to the value of life insurance premiums, the amount in column (i)
also includes contributions by Raytheon E-Systems to the Raytheon E-Systems
401(K) plan of $2,250.

For Mr. Picard the amount shown for 1996 includes a strategic accomplishment
award of $700,000 made by the Board of Directors in special recognition of his
outstanding contribution and success with regard to the Company's strategic plan
since 1991. This includes, for example, the acquisitions of Ebasco, E-Systems,
Litwin, Anschutz and Chrysler Technologies.

For Mr. Wegner the amount shown for 1994 includes amounts paid in connection
with his relocation from Connecticut to Raytheon Aircraft Company's headquarters
in Wichita, Kansas consisting of $181,333 in respect of the loss incurred on the
sale of his residence in Connecticut and $143,253 to reimburse him for tax
liabilities associated with payments under the Company's relocation policies.
<PAGE>
                                       27

(4) The Compensation Committee of the Board of Directors was advised by its
independent compensation consultant that despite the Company's performance
ranking in the top 25th percentile of its peer group, Mr. Picard's compensation
continued to rank below the average of those holding similar positions within
the peer group. Based on key achievements realized in 1996, the Compensation
Committee determined independently to award Mr. Picard an annual performance
incentive bonus which recognized his value to the Company and its stockholders
and took into account his below average compensation position.

(5) In 1996, as part of a review of Mr. Picard's overall compensation, the
Compensation Committee's independent compensation consultant presented
information on predicted option values for the chief executive officers of
companies within the Company's peer group. Based on this information, the
Compensation Committee awarded Mr. Picard stock options designed to provide him
with approximately the same hypothetical economic value as that accorded to the
chief executives of these peer group companies. In fact, as of the date of this
filing, no economic value has been derived from this award.

(6) Includes all salary paid to Mr.Lawson during 1995, including the period 
prior to May 8, 1995 - the effective date of the merger of E-Systems with the
Company.
<PAGE>
                                       28

<TABLE>
<CAPTION>

                      Option Grants In Last Fiscal Year (1)

                     Individual Grants                    Grant Date Value

                                % of Total
                   No. of        Options
                 Securities    Granted to
                 Underlying   Employees in   Exercise or
                  Options       Fiscal       Base Price   Expiration      Grant Date
  Name         Granted(#)(2)     Year       ($/Share)(3)    Date      Present Value(4)
  (a)              (b)           (c)            (d)         (e)              (h)
<S>              <C>            <C>           <C>         <C>          <C>               
Dennis J.          1,902        0.05%         $52.5625    06/09/06      $   20,542
Picard           268,098        6.89%         $52.5625    06/10/06      $2,895,458

A. Lowell          1,902        0.05%         $52.5625    06/09/06      $   20,542
Lawson            38,098        0.98%         $52.5625    06/10/06      $  411,458

William H.         1,902        0.05%         $52.5625    06/09/06      $   20,542
Swanson           38,098        0.98%         $52.5625    06/10/06      $  411,458

Arthur E.          1,902        0.05%         $52.5625    06/09/06      $   20,542
Wegner            38,098        0.98%         $52.5625    06/10/06      $  411,458

Christoph L.       1,902        0.05%         $52.5625    06/09/06      $   20,542
Hoffmann          28,098        0.72%         $52.5625    06/10/06      $  303,458
</TABLE>
<PAGE>
                                       29

(1) The table contains two separate lines for each individual. The first line
represents the grant of incentive stock options and the second represents the
grant of nonqualified stock options. The option grants are reported separately
because they have different expiration dates.

(2)  Options become exercisable one year after the grant date.

(3)  Fair market value of underlying shares on the date of grant.

(4) As of December 31, 1996, the options set forth in this table had no value
because at that date the market value of the underlying shares was below the
option price. Furthermore, the ultimate values of the options will depend on the
future market price of the Company's Common Stock, which cannot be forecast with
reasonable accuracy. The actual value, if any, an optionee will realize upon
exercise of an option will depend on the excess of the market value of the
Company's Common Stock over the exercise price on the date the option is
exercised.

          The estimated grant date present value reflected in the above table is
determined using the Black-Scholes model. As required pursuant to the
regulations of the Securities and Exchange Commission, the material assumptions
and adjustments incorporated in the Black-Scholes model in estimating the value
of the options reflected in the above table include the following: an exercise
price of $52.5625, equal to the fair market value of the underlying stock on the
date of grant; an option term of 10 years; an interest rate of 6.41% that
represents the interest rate on a U.S. Treasury security on the date of grant
with a maturity date corresponding to that of the option term; volatility of
15.0% calculated using daily stock prices for an average of three years prior to
the grant date; assumed dividend growth of 6.0%; and reductions of approximately
5.0% to reflect the probability of forfeiture due to termination prior to
vesting.
<PAGE>
                                       30

<TABLE>
<CAPTION>
                              Aggregated Option Exercises In Last Fiscal Year
                                      And Fiscal Year End Option Values

                                                                Value of 
                                                               Unexercised        
                                     Number of Unexercised     In-the-Money
                                      Options at FY End     Options at FY End
                                             (#)                      $
                                             (d)                     (e)
                                    --------------------    -----------------         
               Shares
            Acquired on    Value
             Exercise    Realized
  Name        (#)(1)      ($)     Exercis-   Unexer-   Exercis-   Unexer-
  (a)          (b)        (c)       able     cisable    able      cisable(1)
-------    ---------   ---------  --------  --------- ----------  -----------
<S>         <C>         <C>       <C>       <C>       <C>          <C>  

Dennis J.    -0-         -0-      499,120    270,000   $7,430,250         $0
Picard

A. Lowell    -0-         -0-        -0-       40,000   $        0         $0
Lawson
<PAGE>
                                       31

William H.   -0-         -0-      134,382     40,000    $2,730,475         $0
Swanson

Arthur E.    -0-         -0-      100,000     40,000    $1,311,870         $0
Wegner

Christoph  2,562       $31,464     65,842     30,000    $  887,539         $0
L. Hoffmann

</TABLE>
<PAGE>
                                       32
                                              
(1)  Based on the $48.125 closing price per share of the Company's Common 
    Stock at December 31, 1996.

         The Company's salaried pension plan (the "Salaried Pension Plan")
covers all salaried employees, excluding those at certain subsidiaries, who have
completed one year of service and attained age 21. The Salaried Pension Plan is
Company funded and does not require or permit employee contributions. Benefits
are computed by a formula which takes into account an employee's years of
service and plan membership, final average compensation and an estimated 
primary Social Security benefit.

         The following table shows the estimated annual retirement benefits
payable to salaried employees on normal retirement at age 65 under the Salaried
Pension Plan and the Company's excess benefit plan, a separate non-funded plan
adopted by the Board of Directors in 1980. The excess benefit plan provides
benefits that would otherwise be denied participants due to certain Internal
Revenue Code limitations on qualified benefit plans.

        Annual Estimated Benefits Under The Raytheon Company Pension Plan
                 For Salaried Employees And Excess Benefit Plan

                      Years of Pension Credit at Age 65
                      ---------------------------------
Final Average
Compensation     15 Years    20 Years    30 Years     40 Years
------------     --------    --------    --------     --------

$  200,000       $ 54,000    $ 72,000    $ 96,000    $  120,000
   400,000        108,000     144,000     192,000       240,000
   600,000        162,000     216,000     288,000       360,000
   800,000        216,000     288,000     384,000       480,000
 1,000,000        270,000     360,000     480,000       600,000
 1,200,000        324,000     432,000     576,000       720,000
 1,400,000        378,000     504,000     672,000       840,000
 1,600,000        432,000     576,000     768,000       960,000
 1,800,000        486,000     648,000     864,000     1,080,000
 2,000,000        540,000     720,000     960,000     1,200,000


         Pension benefits shown in the above table are straight life annuity
amounts and assume retirement at age 65 (normal retirement age). Under the plan
formula, the amounts in the table will be reduced by a percentage of the
employee's estimated primary Social Security benefit. Pension benefits are based
on the average compensation (salary and bonus) paid during the sixty highest
consecutive months of employment. For 1996, covered compensation for Messrs.
Swanson, Wegner and Hoffmann is the same as their salary and bonus shown in the
Summary Compensation Table set forth earlier in this Part III, Item 11. As of
December 31, 1996, those executive officers had the following years of credited
service: Mr. Swanson -- 23 years; Mr. Wegner -- 8 years; and Mr. Hoffmann -- 4
years. The years of credited service for Mr. Wegner include additional years of
service granted to Mr. Wegner as an inducement to join the Company.
<PAGE>
                                       33

         In 1996, the Board of Directors adopted a supplemental executive
retirement plan (the "Supplemental Plan") similar to the plan covering certain
Raytheon E-Systems employees (described below) and to plans currently in place
at companies within the Company's peer group. Mr. Picard's total pension benefit
from both the Salaried Pension Plan and the Supplemental Plan has been fixed at
65% of the average of his covered compensation (consisting of base salary, bonus
and strategic accomplishment award as disclosed in the Summary Compensation
Table set forth earlier in this Part III, Item 11) for the three consecutive
years during the last ten years prior to retirement for which such covered
compensation was the highest. The estimated annual pension benefit for Mr.
Picard based on his current compensation level, assuming retirement at age 65,
is $1,591,417. As of December 31, 1996, Mr. Picard had 41 years of credited
service with the Company.

         Employees of Raytheon E-Systems, including A. Lowell Lawson, do not
participate in the Salaried Pension Plan. Mr. Lawson participates in the
Raytheon E-Systems Salaried Retirement Plan and the supplemental executive
retirement plan (the "SERP"). The SERP provides selected Raytheon E-Systems
executives with retirement income as a supplement to compensation and employee
benefits that would otherwise be denied them by reason of certain Internal
Revenue Code limitations on qualified benefit plans. Specifically, the SERP
provides to participants attaining age 60 and having 10 years of credited
service a retirement benefit in an amount equal to 65% of the participant's
"Average Monthly Compensation." Amounts payable under the SERP are reduced by
payments under the Raytheon E-Systems Salaried Retirement Plan and the
recipient's primary Social Security benefit. "Average Monthly Compensation" is
defined as the sum of the salary and bonus paid the employee during the three
consecutive years out of the ten years preceding retirement or disability which
yields the highest monthly amount when divided by 36. The estimated annual SERP
benefit for Mr. Lawson based on his current compensation level, assuming
retirement at age 65, is $518,702.

         The Company has entered into Change-in-Control Severance Agreements
(the "Severance Agreements") with the executive officers named in the Summary
Compensation Table. The Severance Agreements provide severance pay and
continuation of certain benefits upon the occurrence of a Change in Control.
Entry into the Severance Agreements was unanimously approved by the Board of
Directors. The agreements with Messrs. Picard, Swanson, Wegner and Hoffmann are
effective as of November 22, 1995. The agreement with Mr. Lawson becomes
effective upon the termination of his employment agreement described below.

         Generally, a "Change in Control" will be deemed to have occurred in any
of the following circumstances: (i) the acquisition of 25% or more of the
outstanding voting stock of the Company by any person, entity or group; (ii) the
persons serving as directors of the Company as of November 22, 1995, and
replacements or additions subsequently approved by a majority vote of the Board,
cease to make up at least a majority of the Board; (iii) a merger, consolidation
or reorganization in which the stockholders of the Company prior to the merger
wind up owning less than 50% of the voting power of the surviving corporation;
(iv) a complete liquidation or dissolution of the Company or disposition of all
or substantially all of the assets of the Company.
<PAGE>
                                       34

         The Severance Agreements contain a dual trigger which requires, in
addition to a Change in Control, a qualifying termination of the executive's
employment within two years following a Change in Control for the executive to
receive benefits under the Severance Agreement, which include (i) a cash payment
of three times his current compensation (including base salary plus targeted
bonus); (ii) special supplemental retirement benefits determined as if the
executive had three years additional credit service under the Company's pension
plans as of the date of termination; and (iii) continuation of fringe benefits
pursuant to all welfare, benefit and retirement plans under which the executive
and his family are eligible to receive benefits for a period of up to three
years. In addition, the Severance Agreements provide for a supplemental cash
payment to the executive to the extent necessary to preserve the level of
benefits provided in the event of the imposition on the executive of excise
taxes payable in respect of "excess parachute payments" under the Internal
Revenue Code.

         E-Systems entered into an employment agreement with Mr. Lawson as of
September 27, 1989 which extends through May 8, 1998. Under the agreement, Mr.
Lawson has agreed to render his exclusive services to E-Systems. Mr. Lawson's
minimum annual compensation is the base salary most recently approved by the
Board. The agreement provides for full vesting of Mr. Lawson's benefits under
the SERP, which he may receive upon retirement following his attaining age 60.
Mr. Lawson's employment agreement provides for the continuation of certain of
his business and other perquisites upon retirement, including post-retirement
life insurance benefits in an amount equal to two times his annual salary.

Item 12. Security Ownership of Certain Beneficial Owners and Management

         The following table lists those persons or groups known to the Company
to be the  beneficial owner of more than 5% of the Company's Common Stock as of
December 31, 1996:

Name and Address of       Amount and Nature of                    Percent
Beneficial Owner          Beneficial Ownership                    of Class

FMR Corp.                   16,324,235 (1)                          6.92%
82 Devonshire Street
Boston, MA 02109

(1) FMR Corp. has filed a Schedule 13G with the Securities and Exchange
Commission disclosing that it was the beneficial owner of 16,324,235 shares of
the Company's Common Stock as of December 31, 1996. This number includes:
15,372,792 shares beneficially owned by Fidelity Management & Research Company;
892,423 shares beneficially owned by Fidelity Management Trust Company; 59,020
shares beneficially owned by Fidelity International Limited; and 16,324,235
shares beneficially owned by Edward C. Johnson 3d and Abigail P. Johnson and
members of the Edward C. Johnson 3d family. Edward C. Johnson 3d and FMR Corp.
each has sole dispositive power over 16,265,215 shares and sole voting power
over 570,723 shares. Fidelity International Limited has sole voting and
dispositive power over 59,020 shares.

         As of March 15, 1997, the following directors and named executive
officers and the directors and all executive officers as a group were the
beneficial owners of the number of shares of Common Stock indicated below:
<PAGE>
                                       35

                                  Number of Shares
                                   and Nature of
Beneficial Owner or Group       Beneficial Ownership     Percent of Class

Charles F. Adams                   1,208,817(1)              *
Francis H. Burr                        8,988(2)              *
Ferdinand Colloredo-Mansfeld          10,988(2)              *
Theodore L. Eliot, Jr.                 6,988(2)              *
John R. Galvin                         5,403(2,3)            *
Barbara B. Hauptfuhrer                 6,988(2,4)            *
Richard D. Hill                       11,743(2)              *
Christoph L. Hoffmann                107,774(5)              *
L. Dennis Kozlowski                    9,988(2)              *
James N. Land, Jr.                    10,988(2)              *
A. Lowell Lawson                      40,018(6)              *
Thomas L. Phillips                   217,648                 *
Dennis J. Picard                     797,447(7)              *
Warren B. Rudman                       5,588(2,8)            *
Joseph J. Sisco                        7,883(2)              *
William H. Swanson                   175,143(9)              *
Arthur E. Wegner                     133,601(10)             *
Alfred M. Zeien                        6,988(2)              *

All directors and executive
officers as a group, (31 in   
number, including those
listed above).                     2,453,805(11),12)         1.0%

------------------------------------------------

* Less than one percent of the class

(1)  All shares held in trust and voting and investment power is shared.

(2) Includes 4,988 shares held in trust for the benefit of the individual
director. Each director has the power to vote the shares held for his or her
account. The shares were issued pursuant to the Company's Deferral Plan for
Directors. See Part III, Item 10 of this Report.

(3) Excludes shares held by various mutual funds of the Seligman Group of
Investment Companies.  As a director or trustee,  Gen. Galvin shares voting and
investment power in these shares with other Seligman directors and trustees.
Gen. Galvin disclaims beneficial ownership of all such shares.

(4) Excludes shares held by various mutual funds of the Vanguard Group of 
Investment Companies.  As a director of Vanguard,  Mrs. Hauptfuhrer  shares
voting and investment power in these shares with other Vanguard directors. Mrs.
Hauptfuhrer disclaims beneficial ownership of all such shares.

(5) Includes 17,543 shares as to which voting and investment power are shared,
65,842 shares as to which Mr. Hoffmann has the right to acquire beneficial
ownership within sixty days of said date, 2,389 shares held in the Raytheon
Stock Ownership/Savings and Investment Plan and 22,000 restricted shares over
which he has voting power but no investment power.
<PAGE>
                                       36

(6)  Includes 40,000 restricted shares over which Mr.Lawson has voting power but
no investment power and 18 shares held in the Raytheon Stock Ownership/Savings
and Investment Plan.

(7) Includes 499,120 shares as to which Mr. Picard has the right to acquire
beneficial ownership within sixty days of said date, 518 shares held in the
Raytheon Stock Ownership/Savings and Investment Plan and 66,668 restricted
shares over which he has voting power but no investment power.

(8) Excludes shares held by any of the mutual funds of Dreyfus Corporation. As
a director of several funds managed by Dreyfus Corporation, Mr. Rudman shares
voting and investment power in the shares held by such funds with the other
directors of those funds and with the directors of Dreyfus Corporation.
Mr. Rudman disclaims beneficial ownership of all such shares.

(9) Includes 134,382 shares as to which Mr. Swanson has the right to acquire
beneficial ownership within sixty days of said date, 639 shares held in the
Raytheon Stock Ownership/Savings and Investment Plan and 19,200 restricted
shares over which he has voting power but no investment power.

(10) Includes 100,000 shares as to which Mr. Wegner has the right to acquire
beneficial ownership within sixty days of said date, 41 shares held in the
Raytheon Stock Ownership/Savings and Investment Plan and 24,000 restricted
shares over which he has voting power but no investment power.

(11) Share ownership includes, in the case of certain officers, a minor number
of shares held by trusts or family members as to which beneficial ownership is
disclaimed.

(12) Includes 1,674,900 shares as to which individual members of the group have
the right to acquire beneficial ownership within sixty days of said date, 14,549
shares held in the Raytheon Stock Ownership/Savings and Investment Plan and
320,368 restricted shares over which individuals have voting power but no
investment power.

Item 13. Certain Relationships and Related Transactions

      During 1996 the Company retained the law firm of Ropes & Gray for
various legal services. Francis H. Burr, a Director and member of the Audit,
Planning and Nominating, and Policy Committees, is of counsel to such firm.

     During 1996 the Company retained the law firm of Paul, Weiss, Rifkind,
Wharton and Garrison for various legal services. Warren B. Rudman, a Director
and member of the Compensation, Planning and Nominating and Policy Committees,
is a member of such firm.

    C-M Holdings L.P., of which Mr. Colloredo-Mansfeld is a principal
owner, through a subsidiary, leases an office, service area/warehouse to a
subsidiary of the Company at a rent of approximately $671,386 per year. Mr.
Colloredo-Mansfeld is a Director and member of the Executive, Finance and Policy
Committees.

                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

         (a) Financial Statements and Schedules
<PAGE>
                                       37

             (1)  The following  financial statements of Raytheon  Company and
                  Subsidiaries  Consolidated,  as contained in Raytheon's 1996
                  Annual Report to Stockholders, are hereby incorporated by
                  reference:

                  Balance Sheets at December 31, 1996 and 1995

                  Statements of Income for the Years Ended
                  December 31, 1996, 1995 and 1994

                  Statements of Stockholders' Equity for the Years Ended
                  December 31, 1996, 1995 and 1994

                  Statements of Cash Flows for the Years Ended
                  December 31, 1996, 1995 and 1994

             (2)  The following financial statement schedule is included herein:

                      Schedule II, Reserves for the Three Years Ended
                      December 31, 1996

                      Schedules I, III and IV are omitted because they are not
                      required, not applicable or the information is otherwise
                      included.

         (b) Reports on Form 8-K

             During the first quarter of 1997, the Company made the
             following filings on Form 8-K:

              (1) Raytheon Company Current Report on Form 8-K filed with the
                  Securities and Exchange Commission on January 6, 1997.

              (2) Raytheon Company Current Report on Form 8-K filed with the
                  Securities and Exchange Commission on January 17, 1997.

         (c) Exhibits

             (2.1)  Asset Purchase Agreement dated as of January 4, 1997
                    between Raytheon Company and Texas Instruments
                    Incorporated, heretofore filed as an exhibit to the
                    Company's Current Report on Form 8-K filed with the
                    Securities and Exchange Commission on January 6,
                    1997, is hereby incorporated by reference.

             (2.2)  Agreement and Plan of Merger dated as of January 16,
                    1997 by and between Raytheon Company and HE Holdings,
                    Inc., heretofore filed as an exhibit to the Company's
                    Current Report on Form 8-K filed with the Securities
                    and Exchange Commission on January 17, 1997, is
                    hereby incorporated by reference.

             (2.3)  Implementation Agreement dated as of January 16, 1997
                    by and between Raytheon Company and General Motors
                    Corporation, heretofore filed as an exhibit to the
                    Company's Current Report on Form 8-K filed with the
                    Securities and Exchange Commission on January 17,
                    1997, is hereby incorporated by reference.
<PAGE>
                                       38

             (3.1)  Raytheon Company Restated Certificate of
                    Incorporation, as amended through September 27, 1995,
                    heretofore filed as an exhibit to Raytheon's Form
                    10-Q for the quarter ended October 1, 1995, is hereby
                    incorporated by reference.

             (3.2)  Raytheon Company By-Laws, as amended and restated
                    through October 25, 1995, heretofore filed as an
                    exhibit to Raytheon's Form 10-Q for the quarter ended
                    October 1, 1995, are hereby incorporated by
                    reference.

             (4)    Indenture dated as of July 3, 1995 between Raytheon
                    Company and The Bank of New York, Trustee, relating
                    to the Company's 6 1/2% Notes due July 15, 2005 and
                    the Company's 7 3/8% Debentures due 2025, filed as an
                    exhibit to Raytheon's Registration Statement on Form
                    S-3, File No. 33-59241, is hereby incorporated by
                    reference.

           (10.1)   Raytheon Company 1976 Stock Option Plan, as amended, filed 
                    as an exhibit to the Company's Form 10-Q for the quarter 
                    ended June 30, 1996, is hereby incorporated by reference.

           (10.2)   Raytheon Company 1991 Stock Plan, as amended, filed as an 
                    exhibit to the Company's  Form 10-Q for the quarter ended
                    June 30, 1996, is hereby incorporated by reference.

           (10.3)   Raytheon Company 1995 Stock Option Plan, filed as an exhibit
                    to the Company's Registration Statement on Form S-8, File
                    No. 33-60635, is hereby incorporated by reference.

           (10.4)   Raytheon  Company  Deferral Plan for Directors, filed as an
                    exhibit to the Company's Registration Statement on Form S-8
                    File No. 333-22969, is hereby incorporated by reference.

           (10.5)   Form of Raytheon Company Change in Control Severance
                    Agreement, filed as an exhibit to the Company's Form
                    10-Q for the quarter ended June 30, 1996, is hereby
                    incorporated by reference.**

            (13)    Raytheon Company 1996 Annual Report to Stockholders
                    (furnished for the information of the Commission and
                    not to be deemed "filed" as part of this Report
                    except to the extent that portions thereof are
                    expressly incorporated by reference).

            (21)    Subsidiaries of Raytheon Company*

           (23.1)   Consent of Independent Accountants*

           (23.2)   Report of Independent Accountants*

             (27)   Financial Data Schedule*
<PAGE>
                                       39

* Filed electronically herewith.

** The Company has entered into Change in Control Severance Agreements in
the form of Agreement filed as Exhibit 10.5 with each of the following
executives: Peter R. D'Angelo, Christoph L. Hoffmann, A. Lowell Lawson, Charles
Q. Miller, Dennis J. Picard, Robert L. Swam, William H. Swanson and Arthur
E.Wegner. The agreements are designed to provide the executive with certain
severance benefits following a termination, including, without limitation,
payment of an amount equal to three times the executive's salary and targeted
bonus and the continuation of certain employee benefits for up to three years,
all as more fully described in the form of Agreement.

     The Company has entered into Change in Control Severance Agreements in the
form of Agreement filed as Exhibit 10.5 with nineteen other executives, but
which are immaterial to the Company. The agreements are designed to provide the
executive with certain severance benefits following a termination, including,
without limitation, payment of an amount equal to two times the executive's
salary and targeted bonus and the continuation of certain employee benefits for
up to two years, all as more fully described in the form of Agreement.

                                   SIGNATURE

         Pursuant to the requirements of Section 13 or 15(d) 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.

                                           RAYTHEON COMPANY

                                       /s/ Christoph L. Hoffmann
                                           Christoph L. Hoffmann
                                       Executive Vice President and Secretary
                                               for the Registrant
Dated:  March 26, 1996

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

              SIGNATURES               TITLE                   DATE

 Dennis J. Picard                Chairman of the Board
(Dennis J. Picard)               and Director (Principal   March 26, 1997
                                 Executive Officer)

 Charles F. Adams                     Director             March 26, 1997
(Charles F. Adams)

 Francis H. Burr                      Director             March 26, 1997
(Francis H. Burr)

 Ferdinand Colloredo-Mansfeld         Director             March 26, 1997
(Ferdinand Colloredo-Mansfeld)

 Theodore L. Eliot, Jr.               Director             March 26, 1997
(Theodore L. Eliot, Jr.)
<PAGE>
                                       40

 John R. Galvin                       Director             March 26, 1997
(John R. Galvin)

 Barbara B. Hauptfuhrer               Director             March 26, 1997
(Barbara B. Hauptfuhrer)

 Richard D. Hill                      Director             March 26, 1997
(Richard D. Hill)

                                      Director             March 26, 1997
(L. Dennis Kozlowski)

                                      Director             March 26, 1997
(James N. Land, Jr.)

 A. Lowell Lawson                     Director and         March 26, 1997
(A. Lowell Lawson)               Executive Vice President

 Thomas L. Phillips                    Director            March 26, 1997
(Thomas L. Phillips)

 Warren B. Rudman                      Director            March 26, 1997
(Warren B. Rudman)

 Joseph J. Sisco                       Director            March 26, 1997
(Joseph J. Sisco)

 Alfred M. Zeien                       Director            March 26, 1997
(Alfred M. Zeien)

 Peter R. D'Angelo       Executive Vice President - Chief  March 26, 1997
(Peter R. D'Angelo)      Financial Officer, Controller
                           (Chief Accounting Officer)


<PAGE>
                                       41
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------       
                              RAYTHEON COMPANY AND SUBSIDIARIES CONSOLIDATED
-----------------------------------------------------------------------------------------------------------   
                                               ----------------------------------------------
                                                             SCHEDULE II - RESERVES
                                                   FOR THE THREE YEARS ENDED DECEMBER 31, 1996
                                                   -------------------------------------------
                                 (In thousands)

          COLUMN A                 COLUMN B               COLUMN C                  COLUMN D     COLUMN E

                                                          Additions
                                  Balance at                                                     Balance at
                                  beginning   Charged to costs  Charged to other   Deductions      end of
          Description             of period      and expenses      accounts          Note (1)      Period
<S>                               <C>            <C>                <C>              <C>          <C>
------------------------------------------------------------------------------------------------------------
Year ended December 31, 1996:

  Allowance for doubtful         $22,043         $ 1,207              -              $2,990       $20,260
   accounts receivable

Year ended December 31, 1995:

  Allowance for doubtful         $21,290         $ 3,078              -              $2,325       $22,043
   accounts receivable

Year ended December 31, 1994:

  Allowance for doubtful         $25,891         $ 2,473              -              $ 7,074      $21,290
   accounts receivable


Note (1) - Uncollectible accounts and adjustments, less recoveries

</TABLE>