Raytheon 2013 Annual Report Download - page 28

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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 and financial condition.
At December 31, 2013, we had goodwill and other intangible assets of approximately $13.3 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 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.
For a complete discussion regarding how our financial statements can be affected by goodwill accounting policies, see “Critical
Accounting Estimates” beginning on page 33 within Item 7 of this Form 10-K.
Our business could be negatively impacted by cybersecurity threats and other security threats and disruptions.
As a U.S. defense contractor, we face certain security threats, including threats to our information technology infrastructure,
attempts to gain access to our proprietary or classified information, threats to physical security, and possible domestic terrorism
events. Our information technology networks and related systems are critical to the operation of our business and essential to
our ability to successfully perform day-to-day operations. We are also involved with information technology systems for
certain customers and other third parties, which generally face similar security threats. Cybersecurity threats in particular, are
persistent, evolve quickly and include, but are not limited to, computer viruses, attempts to access information, denial of
service and other electronic security breaches. We believe we have implemented appropriate measures and controls and we
have invested in highly skilled IT resources to appropriately identify threats and mitigate potential risks, but there can be no
assurance that such actions will be sufficient to prevent disruptions to mission critical systems, the unauthorized release of
confidential information or corruption of data. Although we have in the past and will in the future be the subject of such
cybersecurity incidents, to date none had a material impact on our financial condition, results of operations or liquidity.
Nonetheless, these types of events could disrupt our operations or customer and other third party IT systems in which we are
involved. They also could require significant management attention and resources, and could negatively impact our reputation
among our customers and the public, which could have a negative impact on our financial condition, results of operations or
liquidity.
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 condition 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,
claims, demands or investigations could have a negative impact on our financial condition, results of operations or liquidity.