Raytheon 2011 Annual Report Download - page 28

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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.
If we were convicted of a criminal violation of certain federal environmental statutes, including the Federal Clean Air Act
and the Clean Water Act, the facility or facilities involved in the violation would be placed by the Environmental Protection
Agency (EPA) on the “Excluded Parties List” maintained by the Government Services Administration. The listing would
continue until the EPA concluded that the cause of the violation had been cured. Listed facilities cannot be used in performing
any U.S. Government contract awarded during any period of listing by the EPA.
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 interpretation and 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.
ITEM 2. PROPERTIES
We and our subsidiaries operate in a number of plants, laboratories, warehouses and office facilities in the United States and
abroad.
As of December 31, 2011, we owned, leased and/or utilized (through operating agreements) approximately 29.4 million square
feet of floor space for manufacturing, engineering, research, administration, sales and warehousing, approximately 93% of
which was located in the United States. Of such total, approximately 46% was owned (or held under a long-term ground lease
with ownership of the improvements), approximately 48% was leased, and approximately 5% was made available under
facilities contracts for use in the performance of United States Government contracts. Of the 29.4 million square feet of floor
space owned, leased and/or utilized by us, approximately 400,000 square feet was leased or subleased to unrelated third parties.