Raytheon 2004 Annual Report Download - page 40

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22
We are also subject to increasingly stringent laws and regulations that impose strict requirements for the proper
management, treatment, storage and disposal of hazardous substances and wastes, restrict air and water emissions
from our manufacturing operations, and require maintenance of a safe workplace. These laws and regulations can
impose substantial fines and criminal sanctions for violations, and require the installation of costly pollution
control equipment or operational changes to limit pollution emissions and/or decrease the likelihood of accidental
hazardous substance releases. We incur, and expect to continue to incur, substantial capital and operating costs to
comply with these laws and regulations. In addition, new laws and regulations, stricter enforcement of existing laws
and regulations, the discovery of previously unknown contamination or the imposition of new clean-up
requirements could require us to incur costs in the future that would have a negative effect on our financial
condition or results of operations.
Our insurance coverage may be inadequate to cover all significant risk exposures.
We are exposed to liabilities that are unique to the products and services we provide. A significant portion of our
business relates to designing, developing and manufacturing advanced defense and technology systems and
products. New technologies may be untested or unproven. In some, but not all, circumstances, we may receive
indemnification from the U.S. Government. While we maintain insurance for certain risks, the amount of our
insurance coverage may not be adequate to cover all claims or liabilities, and we may be forced to bear substantial
costs resulting from risks and uncertainties of our business. It also is not possible to obtain insurance to protect
against all operational risks and liabilities.
We depend on component availability, subcontractor performance and our key suppliers to manufacture and
deliver our products and services.
Our manufacturing operations are highly dependent upon the delivery of materials by outside suppliers in a timely
manner. In addition, we depend in part upon subcontractors to assemble major components and subsystems used in
our products in a timely and satisfactory manner in full compliance with purchase order terms and conditions and all
applicable laws and regulations. While we enter into long-term or volume purchase agreements with a few of our
suppliers, we cannot be sure that materials, components, and subsystems will be available in the quantities we require,
if at all. We are dependent for some purposes on sole-source suppliers. If any of these sole-source suppliers fails to
meet our needs, we may not have readily available alternatives. Our inability to fill our supply needs would jeopardize
our ability to satisfactorily and timely complete our obligations under government and other contracts. This might
result in reduced sales, termination of one or more of these contracts and damage to our reputation and relationships
with our customers. All of these events could have a negative effect on our financial condition.
The level of returns and the discount rate on pension and retirement plan assets could affect our earnings in future
periods.
Our earnings may be positively or negatively impacted by the amount of income or expense we record for our
employee benefit plans. This is particularly true with income or expense for our pension plans. Generally accepted
accounting principles (GAAP) require that we calculate income or expense for the plans using actuarial valuations.
These valuations are based on assumptions that we make relating to financial and other economic conditions.
Changes in key economic indicators can result in changes in the assumptions we use.
The unpredictability of our results may harm the trading price of our securities, or contribute to volatility.
Our operating results may vary significantly over time for a variety of reasons, many of which are outside of our
control, and any of which may harm our business. The value of our securities may fluctuate as a result of
considerations that are difficult to forecast, such as:
• volume and timing of product orders received and delivered
• levels of product demand
• consumer and government spending patterns
• the timing of contract receipt and funding