Raytheon 2013 Annual Report Download - page 30

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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, results of operations or liquidity.
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 DHS 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.
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 U.S. 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 are regularly
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 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 U.S. and abroad.
As of December 31, 2013 we owned, leased and/or utilized (through operating agreements) approximately 28.5 million square
feet of floor space for manufacturing, engineering, research, administration, sales and warehousing, approximately 94% of
which was located in the U.S., compared to approximately 29.4 million square feet at December 31, 2012. Of the 2013 total,
approximately 49% was owned (or held under a long-term ground lease with ownership of the improvements), approximately
46% was leased, and approximately 5% was made available under facilities contracts for use in the performance of U.S.
Government contracts. In addition to the 28.5 million square feet of floor space described above, approximately 334,000
square feet of space was leased or subleased by us to unrelated third parties.
There are no major encumbrances on any of our facilities other than financing arrangements, which in the aggregate, are not
material. In the opinion of management, our properties have been well maintained, are suitable and adequate for us to operate
at present levels, and the productive capacity and extent of utilization of the facilities are appropriate for our existing real
estate requirements.