Raytheon 2010 Annual Report Download - page 28

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Our operations expose us to the risk of material environmental liabilities.
We use and generate large quantities of hazardous substances and wastes in our manufacturing operations. As a result, we
are subject to potentially material liabilities related to personal injuries or property damages that may be caused by
hazardous substance releases and exposures. For example, we are investigating and remediating contamination related to
our past practices at numerous properties and, in some cases, have been named as a defendant in related “toxic tort”
claims for costs of cleanup and property damages.
We are also subject to increasingly stringent laws and regulations that impose strict requirements for the proper
management, treatment, storage and disposal of hazardous substances and wastes, restrict air and water emissions from
our manufacturing operations, including government-owned facilities we manage, and require maintenance of a safe
workplace. These laws and regulations can impose substantial fines and criminal sanctions for violations, and may require
the installation of costly pollution control equipment or operational changes to limit pollution emissions and/or decrease
the likelihood of accidental hazardous substance releases. In addition, if we were convicted of a violation of the Federal
Clean Air Act or the Clean Water Act, the facility involved in the violation could not be used in performing any U.S.
Government contract awarded during the violation period. We incur, and expect to continue to incur, capital and
operating costs to comply with these laws and regulations. In addition, new laws and regulations, changes in the
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, border
security systems, and air traffic management systems. In some, but not all, circumstances, we may be entitled to
indemnification from our customers, either through contractual provisions, qualification of our products and services by
the Department of Homeland Security under the SAFETY Act provisions of the Homeland Security Act of 2002, or
otherwise. The amount of our insurance coverage we maintain 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.
Unanticipated changes in our tax provisions or exposure to additional income tax liabilities could affect our profitability.
We are subject to income taxes in the United States and many foreign jurisdictions. Significant judgment is required in
determining our worldwide provision for income taxes. In the ordinary course of our business, there are many
transactions and calculations where the ultimate tax determination is uncertain. Furthermore, changes in domestic or
foreign income tax laws and regulations, or their interpretation, could result in higher or lower income tax rates assessed
or changes in the taxability of certain sales or the deductibility of certain expenses, thereby affecting our income tax
expense and profitability. In addition, we regularly are under audit by tax authorities. The final determination of tax
audits and any related litigation could be materially different from our historical income tax provisions and accruals.
Additionally, changes in the geographic mix of our sales could also impact our tax liabilities and affect our income tax
expense and profitability.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
20