UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D. C. 20549

                                    FORM 10-Q

/X/      Quarterly report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the quarterly period ended March 31, 2002

//       Transition report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the transition period
         from ............ to ...............

                         Commission File Number 1-13699

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

                     DELAWARE                           95-1778500
         (State or Other Jurisdiction of    (I.R.S. Employer Identification No.)
          Incorporation or Organization)

           141 SPRING STREET, LEXINGTON, MASSACHUSETTS        02421
            (Address of Principal Executive Offices)         (Zip Code)

                                 (781) 862-6600
              (Registrant's telephone number, including area code)

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

Number of shares of common stock outstanding as of March 31, 2002: 398,207,000




RAYTHEON COMPANY

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

RAYTHEON COMPANY
----------------

BALANCE SHEETS (Unaudited)



                                                                           March 31, 2002       Dec. 31, 2001
                                                                           --------------       -------------
                                                                                      (In millions)
                                                                                            
ASSETS
Current assets
    Cash and cash equivalents                                                $   1,484            $    1,214
    Accounts receivable, less allowance for
        doubtful accounts                                                          375                   480
    Contracts in process                                                         3,609                 3,165
    Inventories                                                                  2,012                 2,030
    Deferred federal and foreign income taxes                                      616                   669
    Prepaid expenses and other current assets                                      160                   309
    Assets from discontinued operations                                            150                 1,631
                                                                             ---------            ----------
         Total current assets                                                    8,406                 9,498
Property, plant, and equipment, net                                              2,293                 2,196
Goodwill, net                                                                   11,359                11,370
Other assets, net                                                                3,597                 3,572
                                                                             ---------            ----------
                  Total assets                                               $  25,655            $   26,636
                                                                             =========            ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
    Notes payable and current portion
        of long-term debt                                                    $   1,792            $    1,363
    Advance payments, less contracts in
        process                                                                    921                   883
    Accounts payable                                                               782                   910
    Accrued salaries and wages                                                     561                   573
    Other accrued expenses                                                       1,366                 1,490
    Liabilities from discontinued operations                                       369                   550
                                                                             ---------            ----------
         Total current liabilities                                               5,791                 5,769
Accrued retiree benefits and other
    long-term liabilities                                                        1,252                 1,283
Deferred federal and foreign income taxes                                          908                   563
Long-term debt                                                                   5,995                 6,874
Mandatorily redeemable equity securities                                           857                   857
Stockholders' equity                                                            10,852                11,290
                                                                             ---------            ----------
                  Total liabilities and stockholders' equity                 $  25,655            $   26,636
                                                                             =========            ==========


The accompanying notes are an integral part of the financial statements.

                                      2



RAYTHEON COMPANY
----------------
STATEMENTS OF INCOME (Unaudited)



                                                                                         Three Months Ended
                                                                               March 31, 2002          April 1, 2001
                                                                               --------------          -------------
                                                                              (In millions except per share amounts)

                                                                                                     
Net sales                                                                        $    3,911                $   3,772
                                                                                 ----------                ---------

Cost of sales                                                                         3,160                    3,072
Administrative and selling expenses                                                     294                      270
Research and development expenses                                                       104                      122
                                                                                 ----------                ---------

Total operating expenses                                                              3,558                    3,464
                                                                                 ----------                ---------

Operating income                                                                        353                      308
                                                                                 ----------                ---------

Interest expense, net                                                                   132                      180
Other expense (income), net                                                               8                      (30)
                                                                                 ----------                ---------

Non-operating expense, net                                                              140                      150
                                                                                 ----------                ---------

Income from continuing operations before taxes                                          213                      158
Federal and foreign income taxes                                                         64                       64
                                                                                 ----------                ---------

Income from continuing operations                                                       149                       94
                                                                                  ---------                ---------

Discontinued operations
     Loss from discontinued operations                                                  (16)                    (332)
     Tax (provision) benefit                                                           (208)                     114
                                                                                  ---------                ---------
                                                                                       (224)                    (218)
                                                                                  ---------                ---------

Loss before extraordinary item and accounting change                                    (75)                    (124)

Extraordinary gain from debt repurchases, net of tax                                    1                        -

Change in accounting principle, net of tax                                           (360)                       -
                                                                                ---------                ---------
Net loss                                                                        $    (434)               $    (124)
                                                                                =========                =========
Earnings per share from continuing operations
       Basic                                                                   $     0.38                $    0.28
       Diluted                                                                 $     0.37                $    0.27

Loss per share
       Basic                                                                   $    (1.10)               $   (0.36)
       Diluted                                                                 $    (1.07)               $   (0.36)

Dividends declared per share                                                   $     0.20                $    0.20


The accompanying notes are an integral part of the financial statements.

                                      3



RAYTHEON COMPANY
----------------
STATEMENTS OF CASH FLOWS (Unaudited)



                                                                                       Three Months Ended
                                                                             March 31, 2002          April 1, 2001
                                                                             --------------          -------------
                                                                                          (In millions)
                                                                                               
Cash flows from operating activities
     Income from continuing operations                                          $      149           $         94
     Adjustments to reconcile income from continuing
        operations to net cash used in operating activities,
        net of the effect of divestitures
         Depreciation and amortization                                                  88                    164
         Net gain on sale of operating units                                             -                    (38)
         Decrease in accounts receivable                                                16                     15
         (Increase) decrease in contracts in process                                  (447)                   134
         Increase in inventories                                                       (18)                  (237)
         Decrease (increase) in current deferred federal and
            foreign income taxes                                                        77                    (63)
         Decrease in prepaid expenses and other
            current assets                                                             103                     23
         Increase (decrease) in advance payments                                        48                   (182)
         Decrease in accounts payable                                                 (114)                  (101)
         Decrease in accrued salaries and wages                                        (14)                    (2)
         Decrease in other accrued expenses                                            (53)                  (177)
         Other adjustments, net                                                         78                     73
                                                                                ----------           ------------
     Net cash used in operating activities from continuing
         operations                                                                    (87)                  (297)
     Net cash used in operating activities from discontinued
         operations                                                                   (224)                  (138)
                                                                                ----------           ------------
Net cash used in operating activities                                                 (311)                  (435)
                                                                                ----------           ------------
Cash flows from investing activities
         Sale of financing receivables, net of repurchases                              (4)                   215
         Origination of financing receivables                                          (87)                  (201)
         Collection of financing receivables not sold                                   31                     14
         Expenditures for property, plant, and equipment                               (85)                   (95)
         Proceeds from sales of property, plant, and equipment                           9                      3
         Expenditures for internal use software                                        (26)                   (34)
         Increase in other assets                                                      (26)                    (4)
         Hughes Defense settlement                                                     134                      -
         Proceeds from sale of operating units                                       1,123                    111
                                                                                ----------           ------------
     Net cash provided by investing activities from continuing
         operations                                                                  1,069                      9
     Net cash used in investing activities from discontinued
         operations                                                                      -                     (9)
                                                                                ----------           ------------
Net cash provided by investing activities                                            1,069                      -
                                                                                ----------           ------------
Cash flows from financing activities
         Dividends paid                                                                (79)                   (68)
         (Decrease) increase in short-term debt                                       (344)                   108
         (Decrease) increase in long-term debt                                         (93)                     4
         Proceeds under common stock plans                                              28                      3
                                                                                ----------           ------------
Net cash (used in) provided by financing activities                                   (488)                    47
                                                                                ----------           ------------
Net increase (decrease) in cash and cash equivalents                                   270                   (388)
Cash and cash equivalents at beginning of year                                       1,214                    871
                                                                                ----------           ------------
Cash and cash equivalents at end of period                                      $    1,484           $        483
                                                                                ==========           ============


The accompanying notes are an integral part of the financial statements.

                                      4



RAYTHEON COMPANY
----------------

NOTES TO FINANCIAL STATEMENTS (Unaudited)

1.  Basis of Presentation
-------------------------

The accompanying unaudited financial statements of Raytheon Company (the
"Company") have been prepared on substantially the same basis as the Company's
annual consolidated financial statements. These interim unaudited financial
statements should be read in conjunction with the Company's Annual Report on
Form 10-K for the year ended December 31, 2001. Significant changes to the
information included in the Form 10-K have been noted in this Form 10-Q. The
information furnished has been prepared from the accounts of the Company without
audit. In the opinion of management, these financial statements reflect all
adjustments, which are of a normal recurring nature, necessary for a fair
presentation of the financial statements for the interim periods. The financial
statements for all periods presented have been restated to reflect the
disposition of Aircraft Integration Systems (AIS) as disclosed in Note 9,
Discontinued Operations. Certain prior year amounts have been reclassified to
conform with the current year presentation.

2.  Restructuring
-----------------

All previously disclosed restructuring actions have been essentially completed,
except for ongoing idle facility costs for which the Company spent $2 million in
the first quarter of 2002. The restructuring-related accrued liability at March
31, 2002 was $22 million.

3.  Business Segment Reporting
------------------------------

The Company operates in five segments: Electronic Systems; Command, Control,
Communication and Information Systems; Technical Services; Commercial
Electronics; and Aircraft. Segment net sales and operating income include
intersegment sales and profit recorded at cost plus a specified fee, which may
differ from what the selling entity would be able to obtain on external sales.
Corporate and Eliminations includes Company-wide accruals and over/under applied
overhead that have not been attributed to a particular segment and intersegment
sales and profit eliminations. In addition, the AIS segment was discontinued.

Segment financial results were as follows:



                                                                                       Net Sales
                                                                                  Three Months Ended
                                                                        March 31, 2002           April 1, 2001
                                                                        --------------           -------------
                                                                                    (In millions)
                                                                                              
Electronic Systems                                                          $2,110                  $1,901
Command, Control, Communication
        and Information Systems                                                970                     855
Technical Services                                                             528                     479
Commercial Electronics                                                          99                     121
Aircraft                                                                       494                     637
Corporate and Eliminations                                                    (290)                   (221)
                                                                            ------                  ------
Total                                                                       $3,911                  $3,772
                                                                            ======                  ======


                                      5





                                                                                  Operating Income
                                                                                 Three Months Ended
                                                                       March 31, 2002         April 1, 2001
                                                                       --------------         -------------
                                                                                    (In millions)

                                                                                        
Electronic Systems                                                      $      295            $        237
Command, Control, Communication
        and Information Systems                                                102                      84
Technical Services                                                              37                      37
Commercial Electronics                                                          (6)                     (6)
Aircraft                                                                       (41)                     (4)
Corporate and Eliminations                                                     (34)                    (40)
                                                                        -----------           ------------
Total                                                                   $      353            $        308
                                                                        ==========            ============




                                                                                  Identifiable Assets
                                                                        March 31, 2002        Dec. 31, 2001
                                                                        --------------        -------------
                                                                                    (In millions)

                                                                                        
Electronic Systems                                                      $    10,803           $     10,497
Command, Control, Communication
        and Information Systems                                               5,236                  5,113
Technical Services                                                            1,625                  1,656
Commercial Electronics                                                          657                    683
Aircraft                                                                      3,183                  3,126
Corporate                                                                     4,001                  3,930
                                                                        -----------           ------------
Total                                                                   $    25,505           $     25,005
                                                                        ===========           ============


Net sales includes intersegment sales during the first quarter of 2002 and 2001,
respectively, of $74 million and $50 million for Electronic Systems, $32 million
and $28 million for Command, Control, Communication and Information Systems,
$157 million and $117 million for Technical Services, $26 million and $25
million for Commercial Electronics, and $1 million and $1 million for Aircraft.

4.  Inventories
---------------

Inventories consisted of the following at:



                                                                        March 31, 2002          Dec. 31, 2001
                                                                        --------------          -------------
                                                                                    (In millions)

                                                                                          
Finished goods                                                            $      589            $       642
Work in process                                                                1,176                  1,111
Materials and purchased parts                                                    394                    424
Excess of current cost over LIFO values                                         (147)                  (147)
                                                                          ----------            -----------
Total                                                                     $    2,012            $     2,030
                                                                          ==========            ===========


                                      6



5.  Special Purpose Entities
----------------------------

In connection with the sale of receivables, Raytheon Aircraft Receivables
Corporation, a special purpose entity, continued in existence at March 31, 2002.
The outstanding balance in the Company's off balance sheet receivables facility
at March 31, 2002 was $1,336 million versus $1,448 million at December 31, 2001.
No material gain or loss resulted from the sales of receivables.

6.  Notes Payable and Long-term Debt
------------------------------------

In the first quarter of 2002, the Company repurchased long-term debt with a par
value of $96 million and recorded an extraordinary gain of $1 million, net of
tax.

The Company's most restrictive bank agreement covenant is an interest coverage
ratio that currently requires earnings before interest, taxes, depreciation, and
amortization (EBITDA), excluding certain charges, be at least 2.5 times net
interest expense for the trailing four quarters. The Company was in compliance
with this covenant during the first quarter of 2002.

7.  Equity Security Units
-------------------------

At March 31, 2002 and December 31, 2001, there were 17,250,000 equity security
units outstanding. Each equity security unit consists of a contract to purchase
shares of the Company's common stock on May 15, 2004 which will result in cash
proceeds to the Company of $863 million, and a mandatorily redeemable equity
security, with a stated liquidation amount of $50 due on May 15, 2006 which will
require a cash payment by the Company of $863 million. The contract obligates
the holder to purchase, for $50, shares of common stock equal to the settlement
rate. The settlement rate is equal to $50 divided by the average market value of
the Company's common stock at that time. The settlement rate cannot be greater
than 1.8182 or less than 1.4903 shares of common stock per purchase contract.
Using the treasury stock method, there is no effect on the computation of shares
for diluted earnings per share if the average market value of the Company's
common stock is between $27.50 and $33.55 per share. During the first quarter of
2002 the average market value was $36.87 per share, therefore, the Company
included 2.3 million shares related to the equity security units in its
computation of shares for diluted earnings per share. The contract requires a
quarterly distribution, which is recorded as a reduction in additional paid-in
capital, of 1.25% per year of the stated amount of $50 per purchase contract.
The mandatorily redeemable equity security pays a quarterly distribution, which
is included in interest expense, of 7% per year of the stated liquidation amount
of $50 per mandatorily redeemable equity security until May 15, 2004. On May 15,
2004, following a remarketing of the mandatorily redeemable equity securities,
the distribution rate will be reset at a rate equal to or greater than 7% per
year.

                                      7



8.  Stockholders' Equity
------------------------

Stockholders' equity consisted of the following at:



                                                                             March 31, 2002          Dec. 31, 2001
                                                                             --------------          -------------
                                                                                         (In millions)

                                                                                               
Preferred stock, no outstanding shares                                        $         --           $         --
Common stock, outstanding shares                                                         4                      4
Additional paid-in capital                                                           7,805                  7,723
Accumulated other comprehensive income                                                (218)                  (212)
Treasury stock                                                                          (2)                    (1)
Retained earnings                                                                    3,263                  3,776
                                                                              ------------           ------------
Total                                                                         $     10,852           $     11,290
                                                                              ============           ============

Outstanding shares of common stock                                                   398.2                  395.4


During the first quarter of 2002, the Company issued 1.4 million shares of
common stock to fund contributions to its savings and investment plans and
1.4 million shares in connection with stock plan activity.

The weighted-average shares outstanding for basic and diluted earnings per share
(EPS) were as follows:



                                                                                       Three Months Ended
                                                                             March 31, 2002           April 1, 2001
                                                                             --------------           -------------
                                                                                         (In thousands)

                                                                                                     
Average common shares outstanding for basic EPS                                   395,679                  340,010
Dilutive effect of stock options and restricted stock                               6,921                    5,118
Dilutive effect of equity security units                                            2,316                        -
                                                                               ----------               ----------
Shares for diluted EPS                                                            404,916                  345,128
                                                                               ==========               ==========


Options to purchase 18.0 million and 21.6 million shares of common stock for the
three months ended March 31, 2002 and April 1, 2001, respectively, did not
affect the computation of diluted EPS. The exercise prices for these options
were greater than the average market price of the Company's common stock during
the respective periods.

Options to purchase 21.2 million and 12.5 million shares of common stock for the
three months ended March 31, 2002 and April 1, 2001, respectively, had exercise
prices that were less than the average market price of the Company's common
stock during the respective periods and are included in the dilutive effect of
stock options and restricted stock in the table above.

                                      8



The components of other comprehensive income for the Company generally include
foreign currency translation adjustments, minimum pension liability adjustments,
unrealized gains and losses on marketable securities classified as
available-for-sale, and unrealized gains and losses on effective hedges. The
computation of comprehensive income follows:



                                                                           Three Months Ended
                                                                  March 31, 2002       April 1, 2001
                                                                  --------------       -------------
                                                                              (In millions)

                                                                                  
Net income (loss)                                                   $    (434)          $     (124)
Other comprehensive income                                                 (6)                  (8)
                                                                    ---------           ----------
Total comprehensive income (loss)                                   $    (440)          $     (132)
                                                                    =========           ==========


9.  Discontinued Operations
---------------------------

In March 2002, the Company completed the sale of AIS for approximately $1,123
million, net, subject to purchase price adjustments. As part of the transaction,
the Company remained the prime contractor for the Airborne Stand-Off Radar
(ASTOR) program and retained the responsibility for performance of the Boeing
Business Jet (BBJ) program, which is nearing completion. The Company also
retained $106 million of BBJ-related assets, $18 million of receivables and
other assets, and rights to a $25 million jury award related to a 1999 claim
against Learjet. The jury award is subject to appeal. Schedule delays, cost
growth, and other variables could have a negative effect on the BBJ-related
assets. The timing and amount of net realizable value of these retained assets
are uncertain and subject to a number of unpredictable market forces. The
Company recorded a net $2 million pretax gain on the sale of AIS. Due to the
non-deductible goodwill associated with AIS, the Company recorded a tax
provision of $213 million, resulting in a $211 million net loss on the sale of
AIS.

The summary of operating results for AIS were as follows:



                                                                          Three Months Ended
                                                                  March 31, 2002     April 1, 2001
                                                                  --------------     -------------
                                                                            (In millions)

                                                                                 
Net sales                                                            $    202          $    196
Operating expenses                                                        198               188
                                                                     --------          --------
Operating income                                                            4                 8
Other expense, net                                                          -                 -
                                                                     --------          --------
Income before taxes                                                         4                 8
Tax provision                                                               1                 5
                                                                     --------          --------
Income from discontinued operations                                  $      3          $      3
                                                                     ========          ========


                                      9



The components of assets and liabilities for AIS were as follows:



                                                                  March 31, 2002      Dec. 31, 2001
                                                                  --------------     -------------
                                                                             (In millions)

                                                                                   
Current assets                                                       $    150            $    495
Noncurrent assets                                                           -               1,136
                                                                     --------            --------
Total assets                                                         $    150            $  1,631
                                                                     ========            ========

Current liabilities                                                  $     44            $     52
Noncurrent liabilities                                                      -                  16
                                                                     --------            --------
Total liabilities                                                    $     44            $     68
                                                                     =========           ========


In 2000, the Company sold its Raytheon Engineers & Constructors (RE&C) business
to Washington Group International (WGI). At the time of the sale, the Company
had, either directly or through a subsidiary that it still owns, outstanding
letters of credit, performance bonds, and parent guarantees of performance and
payment (the "Support Agreements") on many long-term construction contracts. The
Support Agreements were provided to owners at the time of contract award as
security to the owners for the underlying contract obligations. Often the total
security was capped at the value of the contract price to secure full
performance, including the payment of liquidated damages available under the
contract. Some of these contingent obligations and guarantees include warranty
provisions and extend for a number of years.

In March 2001, WGI abandoned two Massachusetts construction projects, triggering
the Company's guarantees to the owners. The Company honored the guarantees and
commenced work on these projects. In the first quarter of 2001, the Company
recorded a charge of $325 million to reflect the then estimated cost to complete
(ETC) two Massachusetts construction projects on which the Company had
performance guarantees. The Company subsequently revised its ETC and recorded a
total charge of $814 million in 2001. Further deterioration in labor
productivity or additional schedule delays could have a material adverse effect
on the Company's financial position and results of operations. The Company
expects to complete construction on the two projects in 2002. Going forward, an
additional 10 percent reduction in labor productivity would increase the ETC by
approximately $20 million, while additional schedule delays will result in
liquidated damages of up to $600,000 per day.

In May 2001, WGI filed for bankruptcy protection. In the course of the
bankruptcy proceeding, WGI rejected some ongoing construction contracts and
assumed others. For those contracts rejected, the Company's obligation to the
owners depends on the extent to which the Company has any outstanding Support
Agreements. The WGI rejected contracts included four large fixed price
international turnkey projects that were close to completion. Of the four
projects, construction has been completed on three, which are now in the claims
resolution phase. The fourth is nearing completion. In the first quarter of
2001, the Company recorded a charge of $14 million related to cost growth on
these projects. The total charge recorded by the Company in 2001 related to
these projects was $54 million. Additional risks and exposures on the three
completed projects are final resolution of contract closeout issues. Additional
risks and exposures on the fourth project include labor productivity, equipment
performance, and schedule delays.

                                     10



Two WGI construction projects on which the Company has Support Agreements have
significant ongoing construction activity. The Company is paying to complete
these projects pursuant to its guarantees and the Company will receive the
benefit of the remaining contract payments from the owners. Additional risks and
exposures on these two projects include labor productivity, equipment
performance, and schedule delays. Additional risks and exposures on the other
projects with Support Agreements include adverse claim resolution and
non-performance on projects assumed by WGI and are subject to the letters of
credit, performance bonds, and parent guarantees noted above.

The Company is heavily dependent upon third parties, including WGI, to perform
construction management and other tasks that require industry expertise the
Company no longer possesses. In addition, there are risks that the ultimate
costs to complete and close-out the projects will increase beyond the Company's
current estimates due to factors such as labor productivity and availability of
labor, the nature and complexity of the work to be performed, the impact of
change orders, the recoverability of claims included in the ETC, and the outcome
of defending claims asserted against the Company. A significant change in an
estimate on one or more of the projects could have a material adverse effect on
the Company's financial position and results of operations.

In the first quarter of 2002, the Company recorded a charge of $22 million for
legal and management costs and interest expense related to RE&C.

Liabilities from discontinued operations included current liabilities for RE&C
of $325 million and $482 million at March 31, 2002 and December 31, 2001,
respectively.

The total loss from discontinued operations was $16 million pretax, $224 million
after-tax, or $0.55 per diluted share in the first quarter of 2002 versus $332
million pretax, $218 million after-tax, or $0.63 per diluted share in the first
quarter of 2001.

10.  Commitments and Contingencies
-----------------------------------

Defense contractors are subject to many levels of audit and investigation.
Agencies that 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 U.S. government contracting. Except as noted in
the following two paragraphs, individually and in the aggregate, these
investigations are not expected to have a material adverse effect on the
Company's financial position or results of operations.

The Department of Justice has informed the Company that the U.S. government has
concluded its investigation of the contemplated sale by the Company of
troposcatter radio equipment to a customer in Pakistan. The Company has produced
documents in response to grand jury subpoenas and grand jury appearances have
taken place. The Company has cooperated fully with the investigation. The U.S.
government has not informed the Company of a final decision with respect to this
matter. An adverse decision in this matter could have a material adverse effect
on the Company's financial position and results of operations.

The Company is permitted to charge to its U.S. government contracts an allocable
portion of the amount that the Company accrues for self-insurance. There is a
disagreement between the Company and the U.S. government about the way the
Company allocated self-insurance charges for product liability risks at Raytheon
Aircraft. The government has not asserted a claim for a specific amount, but
since the allocation practice at issue was adopted in 1988, any potential
government claim could have a material adverse effect on the Company's financial
position and results of operations.

The Company is involved in various stages of investigation and cleanup related
to remediation of various environmental sites. The Company's estimate of total
environmental remediation costs expected to be incurred is $134 million. On a
discounted basis, the Company estimates the liability to be $84 million before
U.S. government recovery. The Company has reduced its

                                      11



environmental liability for the estimated future recovery considered probable
through the pricing of products and services to the U.S. government. The present
value of the Company's environmental liability of $44 million, net of expected
U.S. government recovery, has been accrued at March 31, 2002. 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, any additional liability is not expected to have a material
adverse effect on the Company's financial position or results of operations.

The Company is also involved in other legal matters as more fully described in
"Legal Proceedings" in the Company's Annual Report on Form 10-K for the year
ended December 31, 2001. An adverse resolution of any of these matters could
have a material adverse effect on the Company's financial position or results of
operations in the period in which they are resolved.

In addition, various claims and legal proceedings generally incidental to the
normal course of business are pending or threatened against the Company. While
the ultimate liability from these proceedings is presently indeterminable, any
additional liability is not expected to have a material adverse effect on the
Company's financial position or results of operations.

11.  Other Income and Expense
-----------------------------

The components of other income (expense), net were as follows:



                                                              Three Months Ended
                                                     March 31, 2002          April 1, 2001
                                                     --------------          -------------
                                                                   (In millions)
                                                                         
Gain on sale of the recreational marine business        $       -              $       38
Equity losses in unconsolidated subsidiaries                   (6)                     (5)
Other                                                          (2)                     (3)
                                                        ---------              ----------
Total                                                   $      (8)             $       30
                                                        =========              ==========


12.  Accounting Standards
-------------------------

In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets
(SFAS No. 142). This accounting standard addresses financial accounting and
reporting for goodwill and other intangible assets and requires that goodwill
amortization be discontinued and replaced with periodic tests of impairment. A
two-step impairment test is used to first identify potential goodwill impairment
and then measure the amount of goodwill impairment loss, if any. SFAS No. 142 is
effective for fiscal years beginning after December 15, 2001, and is required to
be applied at the beginning of the fiscal year. Impairment losses that arise due
to the initial application of this standard will be reported as a cumulative
effect of a change in accounting principle. The first step of the goodwill
impairment test, which must be completed within six months of the effective date
of this standard, will identify potential goodwill impairment. The second step
of the goodwill impairment test, which must be completed prior to the issuance
of the annual financial statements, will measure the amount of goodwill
impairment loss, if any.

In accordance with SFAS No. 142, goodwill amortization was discontinued as of
January 1, 2002. The Company recorded a goodwill impairment of $360 million, or
$0.89 per diluted share, related to AIS as a cumulative effect of change in
accounting principle in the first quarter of 2002. Due to the non-deductibility
of this goodwill, the Company did not record a tax benefit in connection with
the impairment.

                                      12



The Company has not completed its analysis of the effect of adopting SFAS No.
142 on its remaining segments, however, the Company expects that this analysis
could result in a goodwill impairment of from $300 million to $900 million,
which will be recorded as a cumulative effect of change in accounting
principle.

The following adjusts reported income from continuing operations and EPS from
continuing operations to exclude goodwill amortization:



                                                                  Three Months Ended
                                                           March 31, 2002            April 1, 2001
                                                           --------------            -------------
                                                          (In millions, except per share amounts)
                                                                               

Reported income from continuing operations                   $     149               $       94
Goodwill amortization, net of tax                                    -                       70
                                                             ---------               ----------
Adjusted income from continuing operations                   $     149               $      164
                                                             =========               ==========

Reported basic EPS from continuing operations                $    0.38               $     0.28
Goodwill amortization, net of tax                                    -                     0.20
                                                             ---------               ----------
Adjusted basic EPS from continuing operations                $    0.38               $     0.48
                                                             =========               ==========

Reported diluted EPS from continuing operations              $    0.37               $     0.27
Goodwill amortization, net of tax                                    -                     0.21
                                                             ---------               ----------
Adjusted diluted EPS from continuing operations              $    0.37               $     0.48
                                                             =========               ==========


13.  Subsequent Events
----------------------

In April 2002, the Company filed a shelf registration with the Securities and
Exchange Commission registering the issuance of up to $3.0 billion in debt
and/or equity securities. The shelf registration is not yet effective.

                                      13



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

Consolidated Results of Continuing Operations
---------------------------------------------

Net sales in the first quarter of 2002 were $3.9 billion versus $3.8 billion for
the same period in 2001. Sales in the first quarter of 2001 included $145
million related to businesses that have since been sold. The increase in sales
was primarily due to continued sales growth in the defense businesses offset by
lower volume at Raytheon Aircraft. Sales to the U.S. Department of Defense were
64 percent of sales in the first quarter of 2002 versus 56 percent of sales in
the first quarter of 2001. Total first quarter 2002 and 2001 sales to the U.S.
government, including foreign military sales, were 74 and 68 percent of sales,
respectively. Total international sales, including foreign military sales, were
20 percent of sales in the first quarter of 2002 versus 23 percent of sales in
the first quarter of 2001.

Gross margin in the first quarter of 2002 was $751 million or 19.2 percent of
sales versus $700 million or 18.6 percent of sales in the first quarter of 2001.
Excluding goodwill amortization, which was discontinued January 1, 2002 as a
result of the adoption of SFAS No. 142, described below, gross margin was $785
million or 20.8 percent of sales in the first quarter of 2001. Included in gross
margin was pension income of $24 million and $74 million in the first quarter of
2002 and 2001, respectively. The decrease in gross margin as a percent of sales
was primarily due to lower margins at Raytheon Aircraft and lower pension income

Administrative and selling expenses were $294 million or 7.5 percent of sales in
the first quarter of 2002 versus $270 million or 7.2 percent of sales in the
first quarter of 2001. The increase was primarily due to the timing of
expenditures related to new proposals. Administrative and selling expenses are
expected to be approximately 6.8 percent of sales for the full year 2002.

Research and development expenses decreased to $104 million or 2.7 percent of
sales in the first quarter of 2002 versus $122 million or 3.2 percent of sales
in the first quarter of 2001. The decrease was primarily due to the timing of
expenditures.

Operating income was $353 million in the first quarter of 2002 versus $308
million in the first quarter of 2001. Excluding goodwill amortization, operating
income was $393 million in the first quarter of 2001. The changes in operating
income by segment are discussed below.

Interest expense, net in the first quarter of 2002 was $132 million versus $180
million in the first quarter of 2001. The decrease was due primarily to lower
average debt and lower weighted-average cost of borrowings due to the interest
rate swaps entered into in 2001. In the first quarter of 2002, the Company
allocated $13 million of interest expense to discontinued operations.

Other expense, net in the first quarter of 2002 was $8 million, versus other
income, net of $30 million in the first quarter of 2001. Included in the first
quarter of 2001 was a gain of $38 million recorded in connection with the
divestiture of the Company's recreational marine business.

                                      14



The effective tax rate was 30.0 percent in the first quarter of 2002 reflecting
the United States statutory rate of 35 percent reduced by foreign sales
corporation tax credits and ESOP dividend deductions. The effective tax rate was
40.5 percent in the first quarter of 2001 reflecting the United States statutory
rate of 35 percent reduced by foreign sales corporation tax credits and research
and development tax credits applicable to certain government contracts, and
increased by non-deductible amortization of goodwill. Excluding the effect of
goodwill amortization, the effective tax rate was 32.5 percent in the first
quarter of 2001. In the first quarter of 2002, the Company's net operating loss
carryforwards that expire in 2020 and 2021 decreased by approximately $500
million as a result of the Job Creation and Worker Assistance Act of 2002, which
permitted the Company to carry back losses to 1996.

Income from continuing operations was $149 million in the first quarter of 2002,
or $0.37 per diluted share on 404.9 million average shares outstanding versus
$94 million in the first quarter of 2001, or $0.27 per diluted share on 345.1
million average shares outstanding. Excluding goodwill amortization, income from
continuing operations was $164 million in the first quarter of 2001, or $0.48
per diluted share. The increase in average shares outstanding was due primarily
to the issuance of 14,375,000 and 31,578,900 shares of common stock in May and
October 2001, respectively.

The loss from discontinued operations, described below, was $224 million
after-tax, or $0.55 per diluted share in the first quarter of 2002 versus $218
million after-tax, or $0.63 per diluted share in the first quarter of 2001.

The net loss in the first quarter of 2002 was $434 million, or $1.07 per diluted
share versus $124 million in the first quarter of 2001, or $0.36 per diluted
share. Excluding goodwill amortization, the net loss was $54 million in the
first quarter of 2001, or $0.16 per diluted share.

Total employment related to continuing operations was 79,000 at March 31, 2002
and 81,100 at December 31, 2001.

Electronic Systems had sales of $2.1 billion in the first quarter of 2002
compared with $1.9 billion in the first quarter of 2001. The increase in sales
was primarily due to higher volume across most business units. Operating income
was $295 million in the first quarter of 2002 versus $237 million a year ago.
Excluding goodwill amortization, operating income was $285 million in the first
quarter of 2001. Included in operating income was pension income of $10 million
and $37 million in the first quarter of 2002 and 2001, respectively. The
increase in operating income was primarily due to higher volume offset by lower
pension income.

Command, Control, Communication and Information Systems had sales of $970
million in the first quarter of 2002 compared with $855 million in the first
quarter of 2001. The first quarter of 2002 included approximately $40 million of
sales which were reclassified from Electronic Systems to Command, Control,
Communication and Information Systems in connection with the formation of Thales
Raytheon Systems in 2001. In addition, there was higher volume across most
business units. Operating income was $102 million in the first quarter of 2002
versus $84 million in the first quarter of 2001. Excluding goodwill
amortization, operating income was $110 million in the first quarter of 2001.
Included in operating income was pension income of $3 million and $11 million in
the first quarter of 2002 and 2001, respectively. Operating income was
negatively affected by lost material savings on certain programs and lower
pension income and positively affected by higher volume.

                                      15



Technical Services had first quarter 2002 sales of $528 million compared with
$479 million in the first quarter of 2001. The increase in sales was due
primarily to higher volume from new programs. Operating income was $37 million
in the first quarter of 2002 and 2001. Excluding goodwill amortization,
operating income was $44 million in the first quarter of 2001. Included in
operating income was pension income of $2 million and $9 million in the first
quarter of 2002 and 2001, respectively. Operating income was negatively affected
by a change in contract mix and lower pension income and positively affected by
higher volume.

Commercial Electronics had sales of $99 million in the first quarter of 2002
compared with first quarter 2001 sales of $121 million. The decrease in sales
was primarily due to the divestiture of the recreational marine business in
January 2001. There was an operating loss of $6 million in the first quarter of
2002 and 2001. Excluding goodwill amortization, the operating loss was $4
million in the first quarter of 2001. Included in the operating losses was
pension income of $1 million and $2 million in the first quarter of 2002 and
2001, respectively. The Company remains concerned about the market outlook for
Commercial Electronics.

Raytheon Aircraft had first quarter 2002 sales of $494 million compared with
$637 million in the first quarter of 2001. The decrease was due to lower
aircraft deliveries in the first quarter of 2002 and the divestiture of a
majority interest in the Company's aviation support business in June 2001. The
first quarter 2002 operating loss of $41 million compared with an operating loss
of $4 million in the first quarter of 2001. Excluding goodwill amortization, the
operating loss was $2 million in the first quarter of 2001. Included in the
operating losses was pension income of $8 million and $15 million in the first
quarter of 2002 and 2001, respectively. The increase in the operating loss was
primarily due to lower volume. The Company remains concerned about the market
outlook for both new and used aircraft and continues to monitor the production
and delivery schedule for the Premier I aircraft and the development cost of the
Horizon aircraft.

Backlog consisted of the following at:



                                                      March 31, 2002                            Dec. 31, 2001
                                                      --------------                            -------------
                                                                          (In millions)
                                                                                          
Electronic Systems                                     $    13,152                              $    13,429
Command, Control, Communication
   and Information Systems                                   5,256                                    5,592
Technical Services                                           1,947                                    1,952
Commercial Electronics                                         433                                      467
Aircraft                                                     4,873                                    4,165
                                                       -----------                              -----------
Total                                                  $    25,661                              $    25,605
                                                       ===========                              ===========
U.S. government backlog
   included above                                      $    17,275                              $    16,943
                                                       ===========                              ===========


Included in Aircraft backlog at March 31, 2002 was approximately $850 million
related to an order received from Flight Options, a related entity, in the first
quarter of 2002.

                                      16



Bookings by segment were as follows:



                                                                        Three Months Ended
                                                                        ------------------
                                                     March 31, 2002                           April 1, 2001
                                                     --------------                           -------------
                                                                          (In millions)
                                                                                          
Electronic Systems                                     $     1,736                              $     1,637
Command, Control, Communication
     and Information Systems                                   613                                      746
Technical Services                                             357                                      224
Commercial Electronics                                          44                                       82
Aircraft                                                     1,202                                      519
                                                       -----------                              -----------
Total                                                  $     3,952                              $     3,208
                                                       ===========                              ===========


Discontinued Operations
-----------------------

In March 2002, the Company completed the sale of AIS for approximately $1,123
million, net, subject to purchase price adjustments. As part of the transaction,
the Company remained the prime contractor for the Airborne Stand-Off Radar
(ASTOR) program and retained the responsibility for performance of the Boeing
Business Jet (BBJ) program, which is nearing completion. The Company also
retained $106 million of BBJ-related assets, $18 million of receivables and
other assets, and rights to a $25 million jury award related to a 1999 claim
against Learjet. The jury award is subject to appeal. Schedule delays, cost
growth, and other variables could have a negative effect on the BBJ-related
assets. The timing and amount of net realizable value of these retained assets
are uncertain and subject to a number of unpredictable market forces. The
Company recorded a net $2 million pretax gain on the sale of AIS. Due to the
non-deductible goodwill associated with AIS, the Company recorded a tax
provision of $213 million, resulting in a $211 million net loss on the sale of
AIS.

In 2000, the Company sold its Raytheon Engineers & Constructors (RE&C) business
to Washington Group International (WGI). At the time of the sale, the Company
had, either directly or through a subsidiary that it still owns, outstanding
letters of credit, performance bonds, and parent guarantees of performance and
payment (the "Support Agreements") on many long-term construction contracts. The
Support Agreements were provided to owners at the time of contract award as
security to the owners for the underlying contract obligations. Often the total
security was capped at the value of the contract price to secure full
performance, including the payment of liquidated damages available under the
contract. Some of these contingent obligations and guarantees include warranty
provisions and extend for a number of years.

In March 2001, WGI abandoned two Massachusetts construction projects, triggering
the Company's guarantees to the owners. The Company honored the guarantees and
commenced work on these projects. In the first quarter of 2001, the Company
recorded a charge of $325 million to reflect the then estimated cost to complete
(ETC) two Massachusetts construction projects on which the Company had
performance guarantees. The Company subsequently revised its ETC and recorded a
total charge of $814 million in 2001. Further deterioration in labor
productivity or additional schedule delays could have a material adverse effect
on the Company's financial position and results of operations. The Company
expects to complete construction on the two projects in 2002. Going forward, an
additional 10 percent reduction in labor productivity would increase the ETC by
approximately $20 million, while additional schedule delays will result in
liquidated damages of up to $600,000 per day.

                                      17



In May 2001, WGI filed for bankruptcy protection. In the course of the
bankruptcy proceeding, WGI rejected some ongoing construction contracts and
assumed others. For those contracts rejected, the Company's obligation to owners
depends on the extent to which the Company has any outstanding Support
Agreements. The WGI rejected contracts included four large fixed price
international turnkey projects that were close to completion. Of the four
projects, construction has been completed on three, which are now in the claims
resolution phase. The fourth is nearing completion. In the first quarter of
2001, the Company recorded a charge of $14 million related to cost growth on
these projects. The total charge recorded by the Company in 2001 related to
these projects was $54 million. Additional risks and exposures on the three
completed projects are final resolution of contract closeout issues. Additional
risks and exposures on the fourth project include labor productivity, equipment
performance, and schedule delays.

Two WGI construction projects on which the Company has Support Agreements have
significant ongoing construction activity. The Company is paying to complete
these projects pursuant to its guarantees and the Company will receive the
benefit of the remaining contract payments from the owners. Additional risks and
exposures on these two projects include labor productivity, equipment
performance, and schedule delays. Additional risks and exposures on the other
projects with Support Agreements include adverse claim resolution and
non-performance on projects assumed by WGI and are subject to the letters of
credit, performance bonds, and parent guarantees noted above.

The Company is heavily dependent upon third parties, including WGI, to perform
construction management and other tasks that require industry expertise the
Company no longer possesses. In addition, there are risks that the ultimate
costs to complete and close-out the projects will increase beyond the Company's
current estimates due to factors such as labor productivity and availability of
labor, the nature and complexity of the work to be performed, the impact of
change orders, the recoverability of claims included in the ETC, and the outcome
of defending claims asserted against the Company. A significant change in an
estimate on one or more of the projects could have a material adverse effect on
the Company's financial position and results of operations.

In the first quarter of 2002, the Company recorded a charge of $22 million for
legal and management costs and interest expense related to RE&C.

Liabilities from discontinued operations included current liabilities for RE&C
of $325 million and $482 million at March 31, 2002 and December 31, 2001,
respectively.

The total loss from discontinued operations was $16 million pretax, $224 million
after-tax, or $0.55 per diluted share in the first quarter of 2002 versus $332
million pretax, $218 million after-tax, or $0.63 per diluted share in the first
quarter of 2001.

Net cash used in operating activities from discontinued operations was $178
million and $46 million related to RE&C and AIS, respectively, in the first
quarter of 2002 versus net cash used of $43 million and $95 million related to
RE&C and AIS, respectively, in the first quarter of 2001. The Company expects
its operating cash flow to be negatively affected by approximately $575 million
(excluding the benefit of tax deductions for the Company) during 2002 which
includes project completion costs, legal and management costs, and interest
related to RE&C. Further increases to project costs may increase the estimated
operating cash outflow for RE&C in 2002.

                                      18



Financial Condition and Liquidity
---------------------------------

Net cash used in operating activities in the first quarter of 2002 was $311
million versus $435 million in the first quarter of 2001. Net cash used in
operating activities from continuing operations was $87 million in the first
quarter of 2002 versus $297 million in the first quarter of 2001. The
improvement was due primarily to changes in inventory levels at Raytheon
Aircraft and a $156 million tax refund received as a result of the change in tax
law described above offset by lower advance payments in 2002.

Net cash provided by investing activities in the first quarter of 2002 was
$1,069 million due primarily to the sale of AIS described above, versus no net
cash provided in the first quarter of 2001. Origination of financing receivables
in the first quarter of 2002 was $87 million versus $201 million in the first
quarter of 2001. Sale of financing receivables, net of repurchases included
sales of $156 million and repurchases of $160 million in the first quarter of
2002 versus sales of $225 million and repurchases of $10 million in the first
quarter of 2001. Capital expenditures were $85 million in the first quarter of
2002 versus $95 million in the first quarter of 2001. Capital expenditures for
the full year 2002 are expected to be approximately $450 million compared to
$461 million in 2001. Expenditures for internal use software were $26 million
and $34 million in the first quarter of 2002 and 2001, respectively.
Expenditures for internal use software are expected to be approximately $90
million in 2002 as the Company continues to convert significant portions of its
existing financial systems to a new integrated financial package. In March 2002,
the Company formed a joint venture with Flight Options, Inc. whereby the Company
contributed its Raytheon Travel Air fractional ownership business and loaned the
new entity $20 million in cash. In March 2002, the Company received $134 million
from Hughes Electronics representing the balance due on an October 2001
settlement regarding the purchase price adjustment related to the Company's
merger with the defense business of Hughes Electronics (Hughes Defense).
Proceeds from sale of operating units and investments were $1,123 million and
$111 million in the first quarter of 2002 and 2001, respectively.

Net cash used by financing activities was $488 million in the first quarter of
2002 versus net cash provided of $47 million in the first quarter of 2001.
Dividends paid to stockholders were $79 million and $68 million in the first
quarter of 2002 and 2001. The quarterly dividend rate was $0.20 per share for
both the first quarter of 2002 and 2001.

                                      19



Capital Structure and Resources
-------------------------------

Total debt was $7.8 billion at March 31, 2002 compared with $8.2 billion at
December 31, 2001. Cash and cash equivalents were $1.5 billion at March 31, 2002
and $1.2 billion at December 31, 2001. Total debt, as a percentage of total
capital, was 39.9 percent at March 31, 2002 and 40.4 percent at December 31,
2001. In the first quarter of 2002, the Company repurchased long-term debt with
a par value of $96 million.

The Company's most restrictive bank agreement covenant is an interest coverage
ratio that currently requires earnings before interest, taxes, depreciation, and
amortization (EBITDA), excluding certain charges, be at least 2.5 times net
interest expense for the trailing four quarters. The Company was in compliance
with this covenant during the first quarter of 2002.

Lines of credit with certain commercial banks exist to provide short-term
liquidity. The lines of credit bear interest based upon LIBOR and were $2.3
billion at March 31, 2002 and $2.4 billion at December 31, 2001. There were no
borrowings under these lines of credit at March 31, 2002. There was $140 million
outstanding under these lines of credit at December 31, 2001.

The outstanding balance in the Company's off balance sheet receivables facility
was $1,336 million at March 31, 2002 and $1,448 million at December 31, 2001.

In April 2002, the Company filed a shelf registration with the Securities and
Exchange Commission registering the issuance of up to $3.0 billion in debt
and/or equity securities. The shelf registration is not yet effective.

The Company's need for, cost of, and access to funds are dependent on future
operating results, as well as conditions external to the Company. Cash and cash
equivalents, cash flow from operations, sale of financing receivables, proceeds
from divestitures, and other available financing resources are expected to be
sufficient to meet anticipated operating, capital expenditure, and debt service
requirements.

Accounting Standards
--------------------

In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets
(SFAS No. 142). This accounting standard addresses financial accounting and
reporting for goodwill and other intangible assets and requires that goodwill
amortization be discontinued and replaced with periodic tests of impairment. A
two-step impairment test is used to first identify potential goodwill impairment
and then measure the amount of goodwill impairment loss, if any. SFAS No. 142 is
effective for fiscal years beginning after December 15, 2001, and is required to
be applied at the beginning of the fiscal year. Impairment losses that arise due
to the initial application of this standard will be reported as a cumulative
effect of a change in accounting principle. The first step of the goodwill
impairment test, which must be completed within six months of the effective date
of this standard, will identify potential goodwill impairment. The second step
of the goodwill impairment test, which must be completed prior to the issuance
of the annual financial statements, will measure the amount of goodwill
impairment loss, if any.

                                      20



In accordance with SFAS No. 142, goodwill amortization was discontinued as of
January 1, 2002. The Company recorded a goodwill impairment of $360 million, or
$0.89 per diluted share, related to AIS as a cumulative effect of change in
accounting principle in the first quarter of 2002. Due to the non-deductibility
of this goodwill, the Company did not record a tax benefit in connection with
the impairment.

The Company has not completed its analysis of the effect of adopting SFAS No.
142 on its remaining segments, however, the Company expects that this analysis
could result in a goodwill impairment of from $300 million to $900 million,
which will be recorded as a cumulative effect of change in accounting principle.

Quantitative and Qualitative Disclosures About Financial Market Risks
---------------------------------------------------------------------

The following discussion covers quantitative and qualitative disclosures about
the Company's market risk. The Company's primary market exposures are to
interest rates and foreign exchange rates.

The Company meets its working capital requirements with a combination of
variable rate short-term and fixed rate long-term financing. The Company enters
into interest rate swap agreements with commercial and investment banks
primarily to manage interest rates associated with the Company's financing
arrangements. The Company also enters into foreign currency forward contracts
with commercial banks only to fix the dollar value of specific commitments and
payments to international vendors and the value of foreign currency denominated
receipts. The market-risk sensitive instruments used by the Company for hedging
are entered into with commercial and investment banks and are directly related
to a particular asset, liability, or transaction for which a commitment is in
place. The Company also sells receivables through a special purpose entity and
retains a partial interest that may include servicing rights, interest-only
strips, and subordinated certificates.

Financial instruments held by the Company which are subject to interest rate
risk include notes payable, long-term debt, long-term receivables, investments,
and interest rate swap agreements. The aggregate hypothetical loss in earnings
for one year of those financial instruments held by the Company at March 31,
2002 and April 1, 2001, which are subject to interest rate risk resulting from a
hypothetical increase in interest rates of 10 percent, was $2 million and $4
million, respectively after-tax. The hypothetical loss was determined by
calculating the aggregate impact of a 10 percent increase in the interest rate
of each variable rate financial instrument held by the Company at March 31, 2002
and April 1, 2001, which was subject to interest rate risk. Fixed rate financial
instruments were not evaluated as the risk exposure is not material.

Forward-Looking Statements
--------------------------

Certain statements made in this report, including any statements relating to the
Company's future plans, objectives, and projected future financial performance,
contain or are based on, forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Specifically, statements that
are not historical facts, including statements accompanied by words such as
"believe," "expect," "estimate," "intend," or "plan," variations of these words
and similar expressions, are intended to identify forward-looking statements and
convey the uncertainty of future events or outcomes. The Company cautions
readers that any such forward-looking statements are based on assumptions that
the Company believes are reasonable, but are subject to a wide-range of risks,
and actual results may differ materially. Given these uncertainties, readers
should not rely on forward-looking statements. Forward-looking statements also
represent the

                                      21



Company's estimates and assumptions only as of the date that they were made. The
Company expressly disclaims any current intention to provide updates to
forward-looking statements, and the estimates and assumptions associated with
them, after the date of this report. Important factors that could cause actual
results to differ include, but are not limited to: differences in anticipated
and actual program results; risks inherent with large long-term fixed price
contracts, particularly the ability to contain cost growth; the ultimate
resolution of contingencies and legal matters; the ability to realize
anticipated cost efficiencies; timely development and certification of new
aircraft; the effect of market conditions, particularly in relation to the
general aviation and commuter aircraft markets; the impact of changes in the
collateral values of financed aircraft, particularly commuter aircraft; the
ability to finance ongoing operations at attractive rates; government customers'
budgetary constraints; government import and export policies; termination of
government contracts; financial and governmental risks related to international
transactions; delays and uncertainties regarding the timing of the award of
international programs; changes in government or customer priorities due to
program reviews or revisions to strategic objectives; difficulties in developing
and producing operationally advanced technology systems; economic business and
political conditions domestically and internationally; program performance and
timing of contract payments; the timing and customer acceptance of product
deliveries; the outcome of the Company's efforts in the integration of
acquisitions and the completion of any divestitures; the impact of competitive
products and pricing; the uncertainty of the timing and amount of net realizable
value of Boeing Business Jet-related assets; and risks associated with the
continuing project obligations and retained assets and retained liabilities of
RE&C, including timely completion of two Massachusetts construction projects,
among other things. Further information regarding the factors that could cause
actual results to differ materially from projected results can be found in the
Company's filings with the Securities and Exchange Commission, including "Item
1-Business" in the Company's Annual Report on Form 10-K for the year ended
December 31, 2001.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is a party to or has property subject to litigation and other
proceedings referenced in "Note 10 - Commitments and Contingencies" of the
Notes to Financial Statements (Unaudited) included in this Form 10-Q and in the
Company's Annual Report on Form 10-K for the year ended December 31, 2001, or
arising in the ordinary course of business. In the opinion of management, except
as otherwise indicated in the Form 10-K, it is unlikely that the outcome of any
such litigation or other proceedings will have a material adverse effect on the
Company's financial position or results of operations.

The Company is primarily engaged in providing products and services under
contracts with the U.S. government and, to a lesser degree, under direct foreign
sales contracts, some of which are funded by the U.S. government. These
contracts are subject to extensive legal and regulatory requirements and, from
time to time, agencies of the U.S. government investigate whether the Company's
operations are being conducted in accordance with these requirements. 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. U.S. government
investigations of the Company, whether relating to these contracts or conducted
for other reasons, could result in administrative, civil, or criminal
liabilities, including repayments, fines or penalties being imposed upon the

                                      22



Company, the suspension of government export licenses, or the suspension or
debarment from future U.S. government contracting. U.S. government
investigations often take years to complete and many result in no adverse
action against the Company.

As previously reported, during late 1999, the Company and certain of its
officers were named as defendants in several class action lawsuits. These
lawsuits were consolidated into a single complaint in June 2000 with the
caption, In Re Raytheon Securities Litigation. In March 2002, the court
         ------------------------------------
certified the class of plaintiffs as those people who purchased Raytheon stock
between October 7, 1998 through October 12, 1999.

See the "Legal Proceedings" section of the Company's Annual Report on Form 10-K
for the year ended December 31, 2001 for detailed descriptions of previously
filed actions.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS

None.

ITEM 6.        EXHIBITS AND REPORTS ON FORM 8-K

      (a)      Exhibits

     10.1  Fourth Amended and Restated Purchase and Sale Agreement dated as of
           March 8, 2002 among Raytheon Aircraft Credit Corporation, Raytheon
           Aircraft Receivables Corporation and the Purchasers named therein.*

     10.2  Reaffirmation of Amended and Restated Guarantee dated as of March 8,
           2002 among Raytheon Company and the Purchasers named therein.*

     10.3  Amendment to the Intercompany Purchase and Contribution Agreement,
           as amended, dated as of March 8, 2002, among Raytheon Aircraft
           Company and the Purchasers named therein.*

     10.4  Second Amended and Restated Repurchase Agreement, dated as of March
           8, 2002, among Raytheon Aircraft Company and the Purchasers named
           therein.*

     (Exhibits marked with an asterisk (*) are filed electronically herewith.)

      (b)      Reports on Form 8-K

      None.

                                      23



SIGNATURE

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

                                               RAYTHEON COMPANY (Registrant)

                                               By:    /s/ Franklyn A. Caine
                                                      Franklyn A. Caine
                                                      Senior Vice President and
                                                      Chief Financial Officer

                                               By:    /s/ Edward S. Pliner
                                                      Edward S. Pliner
                                                      Vice President and
                                                      Corporate Controller
                                                      (Chief Accounting Officer)

April  24, 2002

                                      24




                                  Exhibit List

Exhibit No.      Description
-----------      -----------
10.1             Fourth Amended and Restated Purchase and Sale Agreement dated
                 as of March 8, 2002 among Raytheon Aircraft Credit Corporation,
                 Raytheon Aircraft Receivables Corporation and the Purchasers
                 named therein.

10.2             Reaffirmation of Amended and Restated Guarantee dated as of
                 March 8, 2002 among Raytheon Company and the Purchasers named
                 therein.

10.3             Amendment to the Intercompany Purchase and Contribution
                 Agreement, as amended, dated as of March 8, 2002, among
                 Raytheon Aircraft Company and the Purchasers named therein.

10.4             Second Amended and Restated Repurchase Agreement, dated as of
                 March 8, 2002, among Raytheon Aircraft Company and the
                 Purchasers named therein.

                                       25