Raytheon 2007 Annual Report Download - page 43

sales through the U.S. government of $1.5 billion, $1.3 billion and $1.1 billion, in 2007, 2006 and 2005, respectively.
International sales were principally in the fields of air defense systems, missile systems, airborne radars, naval systems, air
traffic control systems, missile defense systems, electronic equipment, computer software and systems, homeland security
solutions, personnel training, equipment maintenance and microwave communication and other products and services
permitted under the International Traffic in Arms Regulations. Generally, we finance our foreign subsidiary working
capital requirements in the applicable countries. 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. We have acted to protect ourself 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 15: Business Segment Reporting” within Item 8 of this
Form 10-K.
In connection with certain foreign sales, we utilize the services of sales representatives who are paid commissions in
return for services rendered.
The export from the U.S. of many of our products may require the issuance of a license by either the U.S. Department of
State under the Arms Export Control Act of 1976 (formerly the Foreign Military Sales Act), the U.S. Department of
Commerce under the Export Administration Act and its implementing regulations as kept in force by the International
Emergency Economic Powers Act of 1977 (IEEPA), and/or the U.S. Department of the Treasury under IEEPA or the
Trading with the Enemy Act of 1917. Such licenses may be denied for reasons of U.S. national security or foreign policy.
In the case of certain exports of defense equipment and services, the Department of State must notify Congress at least
15-60 days (depending on the identity of the country that will utilize the equipment and services) prior to authorizing
such exports. During that time, the Congress may take action to block or delay a proposed export by joint resolution
which is subject to Presidential veto.
Additional information regarding the risks associated with our international business is contained in Item 1A “Risk
Factors” of this Form 10-K.
Environmental Regulation
Our operations are subject to and affected by a variety of federal, state and local environmental protection laws and
regulations. We have provided for the estimated cost to complete remediation where we have determined that it is
probable that we will incur such costs in the future to address the environmental impact at current or formerly owned
operating facilities or at sites where we have been named a Potentially Responsible Party (PRP) by the Environmental
Protection Agency (EPA) or similarly designated by other environmental agencies. It is difficult to estimate the timing
and ultimate amount of environmental cleanup costs to be incurred in the future due to the uncertainties regarding the
extent of the required cleanup and the status of the law, regulations and their interpretations.
In order to assess the potential impact on our consolidated financial statements, we estimate the possible remediation
costs that we could reasonably incur. Such estimates take into consideration the professional judgment of our
environmental professionals and, in most cases, consultations with outside environmental specialists.
If we are ultimately found to have liability at those sites where we have been designated a PRP, we expect that the actual
costs of remediation will be shared with other liable PRPs. Generally, PRPs that are ultimately determined to be
responsible parties are strictly liable for site clean-up and usually agree among themselves to share, on an allocated basis,
the costs and expenses for investigation and remediation of hazardous materials. Under existing environmental laws,
however, responsible parties may be jointly and severally liable and, therefore, potentially liable for the full cost of
funding such remediation. In the unlikely event that we are required to fund the entire cost of such remediation, the
statutory framework provides that we may pursue rights of contribution from the other PRPs. The amounts we record do
not reflect the unlikely event that we would be required to fund the entire cost of such remediation, nor do they reflect
the possibility that we may recover some of these environmental costs from insurance policies or from other PRPs,
because neither manner of recovery is deemed probable.
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