Raytheon 2004 Annual Report Download - page 36

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We derive a significant portion of our revenues from international sales and are subject to the risks of doing
business in foreign countries.
In 2004, sales to international customers, including foreign military sales, accounted for approximately 18% of
our net sales. We expect that international sales will continue to account for a significant portion of our revenues
for the foreseeable future. As a result, we are subject to risks of doing business internationally, including:
• changes in regulatory requirements
• domestic and foreign government policies, including requirements to expend a portion of program funds
locally and governmental industrial cooperation requirements
• fluctuations in foreign currency exchange rates
• delays in placing orders
• the complexity and necessity of using foreign representatives and consultants
• the uncertainty of adequate and available transportation
• the uncertainty of the ability of foreign customers to finance purchases
• uncertainties and restrictions concerning the availability of funding credit or guarantees
• imposition of tariffs or embargoes, export controls and other trade restrictions
• the difficulty of management and operation of an enterprise spread over various countries
• compliance with a variety of foreign laws, as well as U.S. laws affecting the activities of U.S. companies abroad
• economic and geopolitical developments and conditions, including international hostilities, acts of terrorism
and governmental reactions, inflation, trade relationships, changes in governments and military and political
alliances
• Uncertainty of dispute resolution in foreign jurisdictions
While these factors or the impact of these factors are difficult to predict, any one or more of these factors could
adversely affect our operations in the future.
We may not be successful in obtaining the necessary licenses to conduct operations abroad, and Congress may
prevent proposed sales to foreign governments.
Licenses for the export of many of our products are required from government agencies in accordance with
various statutory authorities, including the International Emergency Economic Powers Act, as amended, the
Trading with the Enemy Act of 1917, as amended, and the Arms Export Control Act of 1976, as amended. We can
give no assurance that we will be successful in obtaining these necessary licenses in order to conduct business
abroad. In the case of certain sales of defense equipment and services to foreign governments, the U.S. Department
of State must notify the Congress at least 15 to 30 days, depending on the size and location of the sale, prior to
authorizing these sales. During that time, the Congress may take action to block the proposed sale.
Competition within our markets may reduce our procurement of future contracts and our sales.
The military and commercial industries in which we operate are highly competitive. Our competitors range from
highly resourceful small concerns, which engineer and produce specialized items, to large, diversified firms. Several
established and emerging companies offer a variety of products for applications similar to those of our products. Our
competitors may have more extensive or more specialized engineering, manufacturing and marketing capabilities than
we do in some areas. There can be no assurance that we can continue to compete effectively with these firms. In
addition, some of our largest customers could develop the capability to manufacture products similar to products that
we manufacture. This would result in these customers supplying their own products and competing directly with us
for sales of these products, all of which could significantly reduce our revenues and seriously harm our business.
Furthermore, we are facing increased international competition and cross-border consolidation of competition.
There can be no assurance that we will be able to compete successfully against our current or future competitors or
that the competitive pressures we face will not result in reduced revenues and market share or seriously harm our
business.