Raytheon 2011 Annual Report Download - page 26

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Significant changes in key estimates and assumptions, such as discount rates and assumed long-term return on assets
(ROA), as well as our actual investment returns on our pension plan assets, and other factors could affect our earnings,
equity and pension contributions in future periods.
We must determine our pension and other benefit plans' expense or income which involves significant judgment, particularly
with respect to our discount rate, long-term ROA and other actuarial assumptions. If our assumptions change significantly
due to changes in economic, legislative, and/or demographic experience or circumstances, our pension and other benefit plans'
expense and funded status, and our cash contributions to such plans could negatively change which would negatively impact
our results of operations. In addition, differences between our actual investment returns and our long-term ROA assumption
would result in a change to our pension and other benefit plans' expense and funded status and our required contributions to
the plans. They may also be impacted by changes in regulatory, accounting and other requirements applicable to pensions.
For a complete discussion regarding how our financial statements can be affected by pension and other benefit plan accounting
policies, see “Critical Accounting Estimates” on page 32 within Item 7 of this Form 10-K.
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.
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 collaborative arrangements. 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.
Goodwill and other intangible assets represent a significant portion of our assets and any impairment of these assets could
negatively impact our results of operations.
At December 31, 2011, we had goodwill and other intangible assets of approximately $13.2 billion, net of accumulated
amortization, which represented approximately 51% of our total assets. Our goodwill is subject to an impairment test on an
annual basis and is also tested whenever events and circumstances indicate that goodwill may be impaired. Any excess goodwill
resulting from the impairment test must be written off in the period of determination. Intangible assets (other than goodwill)
are generally amortized over the useful life of such assets. In addition, from time to time, we may acquire or make an investment
in a business which will require us to record goodwill based on the purchase price and the value of the acquired assets. We
may subsequently experience unforeseen issues which adversely affect the value of our goodwill or the intangible assets and
trigger an evaluation of the recoverability of the recorded goodwill and intangible assets. Future determinations of significant
write-offs of goodwill or intangible assets as a result of an impairment test or any accelerated amortization of other intangible
assets could have a negative impact on our results of operations and financial condition.
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. 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,