Raytheon 2015 Annual Report Download - page 20

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We are subject to government regulations and contract requirements that may differ from U.S. government regulation with
respect to our sales to non-U.S. customers. See “International Sales” below for more information regarding our sales outside
of the U.S. and Item 1A “Risk Factors” of this Form 10-K for a discussion of the risks associated with international sales.
International Sales
(In millions, except percentages) 2015 2014 2013
Total international sales(1) $ 7,150 $ 6,541 $ 6,446
Total international sales as a Percentage of Total Net Sales(1) 31% 29% 27%
(1) Includes foreign military sales through the U.S. government of $2,814 million, $2,962 million and $3,062 million in 2015, 2014 and 2013, respectively.
International sales were principally in the areas of air and missile defense systems, missile systems, airborne radars, naval
systems, air traffic control systems, electronic equipment, computer software and systems, personnel training, equipment
maintenance and microwave communications technology, cybersecurity, and other products and services permitted under the
International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations (EAR). Generally, we internally
fund our foreign subsidiary working capital requirements in the applicable countries. Sales and income from international
operations and investments are subject to U.S. government laws, regulations and policies, including the ITAR, the EAR and
the Foreign Corrupt Practices Act (FCPA) and other anti-corruption laws and the export laws and regulations described below.
They are also subject to foreign government laws, regulations and procurement policies and practices, which may differ from
U.S. government regulation, including import-export control, technology transfer, investments, exchange controls, repatriation
of earnings and requirements to expend a portion of program funds in-country through manufacturing agreements or other
financial support obligations, known as offset obligations. In addition, embargoes, international hostilities and changes in
currency and commodity values can also impact our international sales. Exchange restrictions imposed by various countries
could restrict the transfer of funds between countries, us and our subsidiaries. We have acted to protect ourselves against
various risks through insurance, foreign exchange contracts, contract provisions, government guarantees and/or progress
payments. Our international sales in functional currencies other than the U.S. dollar were approximately $1.3 billion, $1.1
billion and $1.2 billion in 2015, 2014 and 2013, respectively, the majority of which were in British pounds and Australian
dollars with the remainder primarily in euros and Canadian dollars. See total net sales and property, plant and equipment by
geographical area set forth in “Note 16: Business Segment Reporting” within Item 8 of this Form
In connection with certain foreign sales, we utilize the services of sales representatives who are paid commissions in return
for services rendered, and international consultants who are paid a fixed retainer fee. Our Forcepoint joint venture also sells
certain products and services, both domestically and internationally, primarily through a network of distributors and value-
added resellers.
Depending on the type of international sale, Raytheon must either seek various approvals from the U.S. government under
the foreign military sales process or may require an export authorization and the issuance of a license by either the U.S.
Department of State under the Arms Export Control Act of 1976 (formerly the Foreign Military Sales Act) and its implementing
regulations under the ITAR, the U.S. Department of Commerce under the Export Administration Act and its implementing
regulations under the EAR as kept in force by the International Emergency Economic Powers Act of 1977 (IEEPA), and/or
the U.S. Department of the Treasury under IEEPA or the Trading with the Enemy Act of 1917. Such licenses may be denied
for reasons of U.S. national security or foreign policy. In the case of certain exports of defense equipment and services, the
Department of State must notify Congress at least 15–30 days (depending on the identity of the importing country that will
utilize the equipment and services) prior to authorizing such exports. During that time, Congress may take action to block or
delay a proposed export by joint resolution which is subject to Presidential veto. Additional information regarding the risks
associated with our international business is contained in Item 1A “Risk Factors” of this Form 10-K.
Classified Sales
Classified sales include U.S. government sales on programs designated as classified by the U.S. government, as well as
international sales on programs for which the customer, end user or end product is prohibited from being publicly disclosed.
Total classified sales were 16% in 2015 and 15% in 2014 and 2013.