Raytheon 2004 Annual Report Download - page 32

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14
COMPETITION
The Company’s defense electronics businesses are direct participants 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 among the principal competitive factors considered by
defense electronics customers. The on-going consolidation of the U.S. and global defense, space and aerospace
industries continues to intensify competition. Consolidation among U.S. defense, space and aerospace companies
has resulted in a reduction in the number of principal prime contractors. As a result of this consolidation, the
Company frequently partners on various programs with its major suppliers, some of whom are, from time to time,
competitors on other programs.
The Aircraft segment competes primarily with four other companies in the business aviation industry. The
principal factors for competition in the industry are price, financing, operating costs, product reliability, cabin size
and comfort, product quality, travel range and speed, and product support.
PATENTS AND LICENSES
Raytheon and its subsidiaries own a large intellectual property portfolio which includes, by way of example, United
States and foreign patents, unpatented know-how, trademarks and copyrights, all of which contribute significantly
to the preservation of the Company’s competitive position in the market. In certain instances, Raytheon has
augmented its technology base by licensing the proprietary intellectual property of others. The Company also
licenses its intellectual property to others.
EMPLOYMENT
As of December 31, 2004, Raytheon had approximately 79,000 employees compared with approximately 78,000
employees at the end of 2003. The increase is mainly due to overall business growth in multiple market sectors and
on multiple programs during 2004.
Raytheon considers its union-management relationships to be generally satisfactory. In 2004, there were no work
stoppages at any of the Company’s sites.
INTERNATIONAL SALES
Raytheon’s sales to customers outside the United States (including foreign military sales) were $3.7 billion or 18%
of total sales in 2004, $3.5 billion or 19% of total sales in 2003, and $3.5 billion or 21% of total sales in 2002. These
sales were principally in the fields of air defense systems, air traffic control systems, sonar systems, aircraft products,
electronic equipment, computer software and systems, personnel training, equipment maintenance and microwave
communication. Foreign subsidiary working capital requirements generally are financed in the countries
concerned. Sales and income from international operations and investments 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 has acted to protect itself against most undue risks through insurance, foreign exchange contracts,
contract provisions, government guarantees or progress payments. See revenues derived from external customers
and long-lived assets by geographical areas set forth in “Note O – Business Segment Reporting” within Item 8 of
this Form 10-K.