Raytheon 2006 Annual Report Download - page 48

We use estimates in accounting for our pension plan and changes in our estimates could adversely affect our results of
operations.
We must determine our pension plan expense or income which involves significant judgment, particularly with respect to
our long-term return on pension assets and discount rate assumptions. If our discount rate assumption or long-term
return on assets (ROA) (which is used to determine the funded status of our pension plans) is decreased due to changes
in our assumptions or other reasons, our pension plan funded status and expense could increase which would negatively
impact our results of operations. In addition, if our actual return on assets differs from our long-term ROA assumption,
our pension plan funded status and pension expense would change.
We have entered, and expect to continue to enter, into joint venture, teaming and other arrangements, and these activities
involve risks and uncertainties.
We have entered, and expect to continue to enter, into joint venture, teaming and other arrangements, and these
activities involve risks and uncertainties, including the risk of the joint venture or applicable entity failing to satisfy its
obligations, which may result in certain liabilities to us for guarantees and other commitments, the challenges in
achieving strategic objectives and expected benefits of the business arrangement, the risk of conflicts arising between us
and our partners and the difficulty of managing and resolving such conflicts, and the difficulty of managing or otherwise
monitoring such business arrangements.
We have made, and expect to continue to make, strategic acquisitions and investments, and these activities involve risks
and uncertainties.
In pursuing our business strategies, we continually review, evaluate and consider potential investments and acquisitions.
In evaluating such transactions, we are required to make difficult judgments regarding the value of business
opportunities, technologies and other assets, and the risks and cost of potential liabilities. Furthermore, acquisitions and
investments involve certain other risks and uncertainties, including the difficulty in integrating newly-acquired
businesses, the challenges in achieving strategic objectives and other benefits expected from acquisitions or investments,
the diversion of our attention and resources from our operations and other initiatives, the potential impairment of
acquired assets and the potential loss of key employees of the acquired businesses.
The outcome of litigation in which we have been named as a defendant is unpredictable and an adverse decision in any
such matter could have a material adverse effect on our financial position or results of operations.
We are defendants in a number of litigation matters and are subject to various other claims, demands and investigations.
These matters may divert financial and management resources that would otherwise be used to benefit our operations.
Although we believe that we have meritorious defenses to the claims made in the litigation matters to which we have been
named a party and intend to contest each lawsuit vigorously, no assurances can be given that the results of these matters
will be favorable to us. An adverse resolution or outcome of any of these lawsuits, claims, demands or investigations
could have a negative impact on our financial condition, results of operations and liquidity.
We depend on the recruitment and retention of qualified personnel, and our failure to attract and retain such personnel
could seriously harm our business.
Due to the specialized nature of our businesses, our future performance is highly dependent upon the continued services
of our key engineering personnel and executive officers, the development of additional management personnel and the
hiring of new qualified engineering, manufacturing, marketing, sales and management personnel for our operations.
Competition for personnel is intense, and we may not be successful in attracting or retaining qualified personnel. In
addition, certain personnel may be required to receive security clearance and substantial training in order to work on
certain programs or perform certain tasks. The loss of key employees, our inability to attract new qualified employees or
adequately train employees, or the delay in hiring key personnel could seriously harm our business, results of operations
and financial condition.
20