1047122--3/2/2006--RAYTHEON

related topics

{regulation, government, change}

{cost, contract, operation}

{financial, litigation, operation}

{acquisition, growth, future}

{cost, regulation, environmental}

{customer, product, revenue}

{cost, operation, labor}

{tax, income, asset}

{capital, credit, financial}

{operation, international, foreign}

{property, intellectual, protect}

{personnel, key, retain}

{stock, price, operating}

{product, candidate, development}

{product, market, service}

{condition, economic, financial}

{regulation, change, law}

{product, liability, claim}

We depend on the U.S. government for a significant portion of our sales, and the impairment of this relationship or changes in government defense spending could have severe consequences on our business. A substantial majority of our business is governed by U.S. government contracts, which are subject to continued appropriations by Congress and termination. We derive a significant portion of our revenues from international sales and are subject to the risks of doing business in foreign countries. We may not be successful in obtaining the necessary licenses to conduct operations abroad, and Congress may prevent proposed sales to foreign governments. Competition within our markets may reduce our procurement of future contracts and our sales. Our future success depends on our ability to develop new offerings and technologies that achieve market acceptance. We enter into fixed-price contracts which could subject us to losses in the event that we have cost overruns. Our business could be adversely affected by a negative audit by the U.S. government. As a U.S. government contractor, we are subject to a number of procurement rules and regulation. We depend on component availability, subcontractor performance and our key suppliers to manufacture and deliver our products and services. We use estimates in accounting for many of our programs and our new commercial aircraft and changes in our estimates could adversely affect our future financial results. We must assess the value of used aircraft and aircraft materials and parts which requires significant judgment, and changes in the value of such items could adversely affect our future financial results. Goodwill and other intangible assets represent a significant portion of our assets and any impairment of these assets could negatively impact our results of operation. Our results of operations and financial condition could be adversely affected by a downturn in the general aviation and other aircraft markets. We are at risk of losses and adverse publicity stemming from any accident involving aircraft for which we hold design authority. The aircraft manufacturing industry is subject to extensive government regulation, and changes in such regulations may increase our operating costs. We use estimates in accounting for our pension plan and changes in our estimates could adversely affect our results of operations. 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 made, and expect to continue to make, strategic acquisitions and investments, and these activities involve risks and uncertainties. We may incur additional charges relating to our former Engineering and Construction Business. 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 position, results of operations, and liquidity. We depend on the recruitment and retention of qualified personnel, and our failure to attract and retain such personnel could seriously harm our business. Some of our workforce is represented by labor unions so our business could be harmed in the event of a prolonged work stoppage. We may be unable to adequately protect our intellectual property rights, which could affect our ability to compete. Our operations expose us to the risk of material environmental liabilities. We face certain significant risk exposures and potential liabilities that may not be adequately covered by indemnity or insurance. The unpredictability of our results may harm the trading price of our securities, or contribute to volatility. A rating downgrade by credit agencies could limit our access to capital and cause our borrowing costs to increase.

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1047122--3/2/2006--RAYTHEON_CO/