Raytheon 2012 Annual Report Download - page 30

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A summary of the space owned, leased and/or utilized by us as of December 31, 2012, by business segment is as follows:
Leased Owned(1) Government Owned(2) Total(3)
Integrated Defense Systems 1,333,934 3,836,194 109,566 5,279,694
Intelligence and Information Systems 2,144,199 776,544 — 2,920,743
Missile Systems 2,774,683 1,204,785 1,226,967 5,206,435
Network Centric Systems 2,272,592 3,337,968 — 5,610,560
Space and Airborne Systems 2,424,043 3,707,677 — 6,131,720
Technical Services 2,491,211 230,538 207,804 2,929,553
Corporate and Other(4) 478,469 441,806 — 920,275
Totals 13,919,131 13,535,512 1,544,337 28,998,980
(1) Ownership may include either fee ownership of land and improvements or a long-term ground lease with ownership of improvements.
(2) “Government Owned” means space owned by the U.S. or a foreign government utilized by us pursuant to an operating agreement with the U.S. or a
foreign government (GOCO).
(3) Excludes approximately 775,674 square feet of vacant space, and includes 417,218 square feet of space leased or subleased to unrelated third parties.
(4) Includes business development, discontinued operations and Raytheon International, Inc.
ITEM 3. LEGAL PROCEEDINGS
We primarily engage in providing products and services under contracts with the U.S. Government and, to a lesser degree,
under direct foreign sales contracts, some of which the U.S. Government funds. As a government contractor, we are subject
to many levels of audit and investigation by the U.S. Government relating to our contract performance and compliance with
applicable rules and regulations. Agencies that oversee contract performance include: the Defense Contract Audit Agency,
the Defense Contract Management Agency, the Inspector General of the DoD and other departments and agencies, the
Government Accountability Office, the DoJ and Congressional Committees. From time to time, these and other agencies
investigate or conduct audits to determine whether our operations are being conducted in accordance with applicable
requirements. Such investigations and audits could result in administrative, civil or criminal liabilities, including repayments,
fines or penalties being imposed upon us, the suspension of government export licenses or the suspension or debarment from
future U.S. Government contracting. U.S. Government investigations often take years to complete and many result in no
adverse action against us. Our final allowable incurred costs for each year are also subject to audit and have from time to time
resulted in disputes between us and the U.S. Government with litigation resulting at the Court of Federal Claims (COFC) or
the Armed Services Board of Contract Appeals (ASBCA) or their related courts of appeals. In addition, the DoJ has, from
time to time, convened grand juries to investigate possible irregularities by us. We also provide products and services to
customers outside of the U.S. and those sales are subject to local government laws, regulations, and procurement policies and
practices. Our compliance with such local government regulations or any applicable U.S. Government regulations (e.g., the
Foreign Corrupt Practices Act and ITAR) may also be investigated or audited. Other than as specifically disclosed in this Form
10-K, we do not expect these audits, investigations or disputes to have a material effect on our financial position, results of
operations or liquidity, either individually or in the aggregate.
We have completed a self-initiated internal review of certain of our international operations, focusing on compliance with the
Foreign Corrupt Practices Act. In the course of the review, we identified possible areas of concern involving certain practices
related to operations in a foreign jurisdiction where we do business. We voluntarily disclosed and shared the results of our
review with the SEC and the DoJ. The SEC staff and the DoJ have completed their review of this matter without recommending
enforcement action.
On August 18, 2010, the U.K. Border Agency (UKBA) initiated arbitration proceedings in the London Court of International
Arbitration against Raytheon Systems Limited (RSL) in connection with the parties' dispute with respect to the UKBA's
termination of RSL for cause on a program. The UKBA claimed that RSL had failed to perform on certain key milestones and
other matters and that the UKBA was entitled to recovery of certain losses incurred and previous payments made to RSL. In
March 2011, the UKBA gave notice that it had presented a demand to draw on the approximately $80 million of letters of
credit provided by RSL upon the signing of the contract with the UKBA in 2007. At RSL's request, the Arbitration Tribunal
initially issued an interim order restraining the drawdown but, following a hearing on the issue, lifted the restraint and concluded
that any decision on the UKBA's right to call on the letters of credit is inextricably intertwined with the ultimate decision on
the merits in the arbitration. The Tribunal also preserved RSL's right to claim damages should RSL later establish that the