Raytheon 2007 Annual Report Download - page 46

Our international sales are a growing portion of our business; accordingly, we may increasingly become subject to the risks
of doing business in foreign countries.
Our international business exposes us to certain unique and potentially greater risks than our domestic business and our
exposure to such risks may increase if our international business continues to grow as we anticipate. Our international
business is sensitive to changes in the priorities and budgets of international customers, which may be driven by
potentially volatile regional and local economic and political factors, as well as U.S. foreign policy. Our international sales
are also subject to local government regulations and procurement policies and practices which may differ from U.S.
government regulation, including regulations relating to import-export control, investments, exchange controls and
repatriation of earnings, as well as to varying currency, geo-political and economic risks. We also are exposed to risks
associated with using foreign representatives and consultants for international sales and operations and teaming with
international subcontractors and suppliers in connection with international programs. As a result of these factors, we
could experience award and funding delays on international programs and could incur losses on such programs which
could negatively impact our results of operations and financial condition.
We may not be successful in obtaining the necessary licenses to conduct operations abroad, and Congress may prevent
proposed sales to foreign governments.
Due to the nature of our products, we must first obtain licenses and authorizations from various U.S. government
agencies before we are permitted to sell our products outside of the U.S. For example, the U.S. Department of State must
notify Congress at least 15-60 days, depending on the size and location of the sale, prior to authorizing certain sales of
defense equipment and services to foreign governments. During that time, Congress may take action to block the
proposed sale. We can give no assurance that we will continue to be successful in obtaining the necessary licenses or
authorizations or that Congress will not prevent or delay certain sales. Any significant impairment of our ability to sell
products outside of the U.S. could negatively impact our results of operations and financial condition.
Competition within our markets may reduce our revenues and market share.
We operate in highly competitive markets and our competitors may have more extensive or more specialized engineering,
manufacturing and marketing capabilities than we do in some areas. We anticipate increasing competition in our core
markets as a result of defense industry consolidation, which has enabled companies to enhance their competitive position
and ability to compete against us, and the anticipated moderation of U.S. defense spending growth, which will limit
market opportunities for us and our competitors. These markets also are becoming increasingly more concentrated due
to the trend of certain customers awarding a smaller number of large multi-service contracts. We are also facing
increasing competition in our domestic and international markets from foreign and multinational firms. Additionally,
some customers, including the DoD, are increasingly turning to commercial contractors, rather than traditional defense
contractors, for information technology and other support work. If we are unable to continue to compete successfully
against our current or future competitors, we may experience declines in revenues and market share which could
negatively impact our results of operations and financial condition.
Our future success depends on our ability to develop new offerings and technologies for our current and future markets.
To achieve our business strategies and continue to grow our revenues and operating profit, we must successfully develop
new or adapt or modify our existing offerings and technologies for our current core defense markets and our future
markets, including adjacent and emerging markets. Accordingly, our future performance depends on a number of
factors, including our ability to:
ⳮIdentify emerging technological trends in our current and future markets;
ⳮIdentify additional uses for our existing technology to address customer needs in our current or future markets;
ⳮDevelop and maintain competitive products and services for our current and future markets;
ⳮEnhance our offerings by adding innovative features that differentiate our offerings from those of our competitors;
ⳮDevelop and manufacture and bring solutions to market quickly at cost-effective prices; and
ⳮEffectively structure our businesses, through the use of joint ventures, teaming agreements and other forms of
alliances, to reflect the competitive environment.
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