Raytheon 2012 Annual Report Download - page 28

20
We may be unable to adequately protect our intellectual property rights, which could affect our ability to compete.
We own many U.S. and foreign patents and patent applications, and have rights in unpatented know-how, data, software,
trademarks and copyrights. The U.S. Government has licenses under certain of our patents and certain other intellectual
property that are developed or used in performance of government contracts, and it may use or authorize others to use such
patents and intellectual property for government and other purposes. There can be no assurance that any of our patents and
other intellectual property will not be challenged, invalidated, misappropriated or circumvented by third parties. In some
instances, we have augmented our technology base by licensing the proprietary intellectual property of others. In the future,
we may not be able to obtain necessary licenses on commercially reasonable terms. We enter into confidentiality and invention
assignment agreements with our employees and enter into non-disclosure agreements with our suppliers and appropriate
customers so as to limit access to and prevent disclosure of our proprietary information. These measures may not suffice to
deter misappropriation or third party development of similar technologies. Moreover, the laws concerning intellectual property
vary among nations and the protection provided to our intellectual property by the laws and courts of foreign nations may not
be as advantageous to us as the remedies available under U.S. law.
Our operations expose us to the risk of material environmental liabilities.
We use and generate 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 past practices at a number of 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 laws and regulations that: (i) impose requirements for the proper management, treatment, storage and
disposal of hazardous substances and wastes; (ii) restrict air and water emissions from our manufacturing operations (including
government-owned facilities we manage); and (iii) 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 standards 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 or indemnification to which we may be contractually or otherwise entitled may not be adequate to cover
all claims or liabilities, and it is not possible to obtain insurance or indemnification coverage 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, financial condition or liquidity.