Raytheon 2009 Annual Report Download - page 28

matters. These statements inherently involve a wide range of known and unknown uncertainties. Our actual actions and
results could differ materially from what is expressed or implied by these statements. Specific factors that could cause
such a difference include, but are not limited to, those set forth below and other important factors disclosed previously
and from time to time in our other filings with the Securities and Exchange Commission. Given these factors, as well as
other variables that may affect our operating results, you should not rely on forward-looking statements, assume that past
financial performance will be a reliable indicator of future performance, nor use historical trends to anticipate results or
trends in future periods. We expressly disclaim any obligation or intention to provide updates to the forward-looking
statements and the estimates and assumptions associated with them.
We depend on the U.S. Government for a substantial portion of our business and changes in government defense spending
could have consequences on our financial position, results of operations and business.
In 2009, U.S. Government sales accounted for approximately 88% of our total net sales. U.S. Government sales included
foreign military sales through the U.S. Government of $2.8 billion in 2009. Our revenues from the U.S. Government
largely result from contracts awarded to us under various U.S. Government programs, primarily defense-related
programs with the Department of Defense (DoD), as well as a broad range of programs with the Department of
Homeland Security, the Intelligence Community and other departments and agencies. The funding of our programs is
subject to the overall U.S. Government budget and appropriation decisions and processes which are driven by numerous
factors, including geo-political events and macroeconomic conditions, and are beyond our control. The overall level of
U.S. defense spending has increased in recent years for numerous reasons, including increases in funding of operations in
Iraq and Afghanistan and the DoD’s modernization initiatives. Looking forward, we expect overall defense spending to
increase in the near term, albeit at lower rates than in recent years. However, projected defense spending levels are
uncertain and become increasingly difficult to predict for periods beyond the near-term due to numerous factors,
including the external threat environment, funding for on-going operations in Iraq and Afghanistan, future priorities of
the Administration and the overall health of the U.S. and world economies and the state of governmental finances.
Significant changes in defense spending could have long-term consequences for our size and structure. In addition,
changes in government priorities and requirements could impact the funding, or the timing of funding, of our programs
which could negatively impact our results of operations and financial condition.
Our financial performance is dependent on our ability to perform our U.S. Government contracts, which are subject to
uncertain levels of funding and termination.
Our financial performance is dependent on our performance under our U.S. Government contracts. While we are
involved in numerous programs and are party to thousands of U.S. Government contracts, the termination of one or
more large contracts, whether due to lack of funding, for convenience, or otherwise, or the occurrence of delays, cost
overruns and product failures in connection with one or more large contracts, could negatively impact our results of
operations and financial condition. Furthermore, we can give no assurance that we would be able to procure new U.S.
Government contracts to offset the revenues lost as a result of termination of any of our contracts.
The funding of U.S. Government programs is subject to congressional appropriations. Congress generally appropriates
funds on a fiscal year basis even though a program may extend over several fiscal years. Consequently, programs are often
only partially funded initially and additional funds are committed only as Congress makes further appropriations. If
appropriations for one of our programs become unavailable, or are reduced or delayed, our contract or subcontract
under such program may be terminated or adjusted by the government, which could have a negative impact on our
future sales under such contract or subcontract. From time to time, when a formal appropriation bill has not been signed
into law before the end of the U.S. Government’s fiscal year, Congress may pass a continuing resolution that authorizes
agencies of the U.S. Government to continue to operate, generally at the same funding levels from the prior year, but does
not authorize new spending initiatives, during a certain period. During such period (or until the regular appropriation
bills are passed), delays can occur in procurement of products and services due to lack of funding, and these delays can
affect our results of operations during the period of delay.
In addition, U.S. Government contracts generally also permit the government to terminate the contract, in whole or in
part, without prior notice, at the government’s convenience or for default based on performance. If one of our contracts
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