Raytheon 2012 Annual Report Download - page 19

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affecting the periods in which revenues are recorded. We expect this trend to continue in 2013.
Competition
We directly participate in most major areas of development in the defense and government electronics, space, information
technology and technical services and support markets. Technical superiority, reputation, price, past performance, delivery
schedules, financing and reliability are among the principal competitive factors considered by customers in these markets.
We compete worldwide with a number of U.S. and international companies in these markets, some of which may have more
extensive or more specialized engineering, manufacturing and marketing capabilities than we do in some areas. The ongoing
consolidation of the U.S. and global defense, space and aerospace industries continues to intensify competition. We frequently
partner on various programs with our major suppliers, some of whom are, from time to time competitors on other programs.
In addition, U.S. defense spending levels in the near future are increasingly difficult to predict. Changes in U.S. defense
spending may potentially limit certain future market opportunities. See Item 1A “Risk Factors” and “Overview” within Item 7
of this Form 10-K for a more detailed discussion of these and other related risks.
Patents and Licenses
We own an intellectual property portfolio which includes many U.S. and foreign patents, as well as unpatented trade secrets
and know-how, data, software, trademarks and copyrights, all of which contribute to the preservation of our competitive
position in the market. In certain instances, we have augmented our technology base by licensing the proprietary intellectual
property of others. We also license our intellectual property to others, including our customers, in certain instances. The U.S.
Government has licenses in our patents developed in the performance of U.S. Government contracts, and has the right to use
and authorize others to use inventions covered by such patents for U.S. Government purposes. While our intellectual property
rights in the aggregate are important to the operation of Raytheon, we do not believe that any particular trade secret, patent,
trademark, copyright, license or other intellectual property right is of such importance that its loss or termination would have
a material adverse effect on our business.
Employment
As of December 31, 2012, we had approximately 67,800 employees. Approximately 8% of our employees are unionized. We
consider our union-management relationships to be generally satisfactory.
Environmental Regulation
Our operations are subject to and affected by a variety of international, federal, state and local environmental protection laws
and regulations. We have provided for the estimated cost to complete remediation—or, in the case of multi-party sites, our
reasonably expected share thereof—where we have determined that it is probable that we will incur such costs in the future
in connection with (i) facilities that are now, or were previously, owned or operated by us, (ii) sites where we have been named
a Potentially Responsible Party (PRP) by the Environmental Protection Agency (EPA) or similarly designated by other
environmental agencies, or (iii) sites where we have been named in a cost recovery or contribution claim by a non-governmental
third party. It is difficult to estimate the timing and ultimate amount of environmental cleanup costs to be incurred in the future
due to the uncertainties regarding the extent of the required cleanup, the discovery and application of innovative remediation
technologies, and the status and interpretation of the laws and regulations.
In order to assess the potential impact on our consolidated financial statements, we estimate the possible remediation costs
that we could reasonably incur. Such estimates take into consideration the professional judgment of our environmental
professionals and, in most cases, consultations with outside environmental specialists.
If we are ultimately found to have liability at a multi-party site where we have been designated a PRP or have been named in
a cost recovery or contribution claim from a non-governmental third party, we expect that the actual costs of remediation will
be shared with other liable PRPs. Generally, PRPs that are ultimately determined to be responsible parties are strictly liable
for site clean-up and usually agree among themselves to share, on an allocated basis, the costs and expenses for investigation
and remediation of hazardous materials. Under existing environmental laws, however, responsible parties are, in most
circumstances and jurisdictions, jointly and severally liable and, therefore, potentially liable for the full cost of funding such
remediation. In the unlikely event that we are required to fund the entire cost of such remediation, the statutory framework
provides that we may pursue rights of contribution from the other PRPs. The amounts we record do not reflect the unlikely
event that we would be required to fund the entire cost of such remediation, nor do they reflect the possibility that we may
recover some of these environmental costs from insurance policies or from other PRPs. However, a portion of these costs is
eligible for future recovery through the pricing of our products and services to the U.S. Government.