Raytheon 2015 Annual Report Download - page 28

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Our international sales are also subject to local government laws, regulations, and procurement policies and practices which
may differ from U.S. government regulations. These include regulations relating to export-import control, technology transfer,
investments, exchange controls and repatriation of earnings. Furthermore, our international sales contracts may be subject to
non-U.S. contract laws and regulations and include contractual terms that differ from those of similar contracts in the U.S. or
terms that may be interpreted differently by foreign courts. These contracts may also be subject to termination at the customer's
convenience or for default based on performance, and may be subject to funding risks. In addition, the timing of orders,
customer negotiations, governmental approvals and notifications from our international customers can be less predictable than
from our domestic customers, and this may lead to variations in international bookings and sales each year. We must also
manage a certain degree of exposure to the risk of currency fluctuations.
Our international business faces substantial competition from both U.S. companies and foreign companies. In some instances,
foreign companies may receive loans, marketing subsidies and other assistance from their governments that may not be
available to U.S. companies. In addition, foreign companies may be subject to fewer restrictions on technology transfer than
U.S. companies.
Our international contracts may include industrial cooperation agreements requiring specific local purchases, manufacturing
agreements or financial support obligations, known as offset obligations, and provide for penalties if we fail to meet such
requirements. Approvals of offset thresholds and requirements may be subjective and time-consuming and may delay contract
awards, and may, in certain countries, require the creation of a joint venture with a local company, which may control the
venture. This could result in liability for violations of law for actions taken by these entities, such as laws related to anti-
corruption, import and export, or local laws which may differ from U.S. laws and requirements. Such offset obligations are
generally multi-year arrangements and may provide for penalties in the event we fail to perform in accordance with the offset
requirements. We also are exposed to risks associated with using third-party foreign representatives and consultants for
international sales, and teaming with international subcontractors, partners and suppliers in connection with international
programs. As a result of these factors, we could experience financial penalties and award and funding delays on international
programs, and could incur losses on such programs which could negatively impact our results of operations, financial condition
or liquidity.
Our business could be negatively impacted by cyber attacks and other security breaches and other disruptions.
As part of our business, we face certain security threats, including threats to our information technology infrastructure, attempts
to gain access to our proprietary, sensitive or classified information, threats to physical security, including our facilities and
personnel, and threats from terrorism or similar acts. We also face the potential for business disruptions associated with natural
disasters. Cybersecurity threats in particular are persistent, evolve quickly and include, but are not limited to, computer viruses,
attempts to access information, denial of service attacks and other electronic security breaches. 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 have in the past and will in the future continue to be the subject of cybersecurity threats. In addition,
our customers, suppliers, subcontractors and other third parties with whom we do business generally face similar security
threats, and in some cases we must rely on the safeguards put in place by these parties to protect against security threats. We
believe we have implemented appropriate measures and controls and have invested in significant resources to appropriately
identify and monitor these threats and mitigate potential risks, including risks involving our customers and suppliers. However,
there can be no assurance that any such actions will be sufficient to prevent cybersecurity breaches, disruptions to mission
critical systems, the unauthorized release of sensitive information or corruption of data, or harm to facilities or personnel.
In addition, as a provider of products and services to government and commercial customers, including through Forcepoint,
our products and services may be the targets of cyber attacks that attempt to sabotage or otherwise disable them, or our
cybersecurity and other products and services ultimately may not be able to effectively detect, prevent, or protect against or
otherwise mitigate losses from all cyber attacks.
The impact of these security threats and other disruptions, including cyber attacks and other security breaches, is difficult to
predict. Furthermore, our insurance coverage may not be adequate to cover all related costs. These threats and other events
could disrupt our operations, or the operations of our customers, suppliers, subcontractors and other third parties, could require
significant management attention and resources, could result in the loss of business, regulatory actions and potential liability,
and could negatively impact our reputation among our customers and the public, any one of which could have a negative
impact on our financial condition, results of operations or liquidity.