Raytheon 2005 Annual Report Download - page 44

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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.
We face certain significant risk exposures and potential liabilities that may not be adequately covered by indemnity or
insurance.
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 addition, we may incur significant
liabilities that are unique to our products and services, including missile systems, command and control systems, and air
traffic management systems. 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 it is not possible to obtain insurance to protect against all operational risks and
liabilities. Accordingly, we may be forced to bear substantial costs resulting from risks and uncertainties of our business
which would negatively impact our results of operations and financial condition.
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:
ⳮvolume and timing of product orders received and delivered;
ⳮlevels of product demand;
ⳮgovernment spending patterns;
ⳮthe timing of contract receipt and funding;
ⳮour ability and the ability of our key suppliers to respond to changes in customer orders;
ⳮtiming of our new product introductions and the new product introductions of our competitors;
ⳮchanges in the mix of our products;
ⳮcost and availability of components and subsystems;
ⳮprice erosion;
ⳮadoption of new technologies and industry standards;
ⳮcompetitive factors, including pricing, availability and demand for competing products;
ⳮfluctuations in foreign currency exchange rates;
ⳮconditions in the capital markets and the availability of project financing;
ⳮregulatory developments;
ⳮgeneral economic conditions, particularly the cyclical nature of the general aviation market in which we participate;
and
ⳮour ability to obtain licenses from the U.S. government to sell products abroad.
A rating downgrade by credit agencies could limit our access to capital and cause our borrowing costs to increase.
A downgrade in our credit rating could negatively affect our ability to access capital. If the rating agencies downgrade our
ratings, particularly below investment grade, it may significantly limit our access to capital and our borrowing costs
would increase. In addition, we would likely be required to pay a higher interest rate in future financings and our
potential pool of investors and funding sources would likely decrease.
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