Raytheon 2007 Annual Report Download - page 72

MS provides a broad range of cutting edge weapon systems that includes missiles, smart munitions, projectiles, kinetic
kill vehicles, space vehicles and directed energy effectors. In 2007, MS continued to demonstrate its missile defense
capability with several significant test successes including three successful launches of the sea-based system with Standard
Missile-3 and one successful launch of the ground-based system that incorporates the Exoatmospheric Kill Vehicle
(EKV).
Net Sales. The increase in sales in 2007 of $490 million was primarily due to $414 million of higher volume on the
Standard Missile, Phalanx and Evolved Sea Sparrow (ESSM) programs.
The increase in sales in 2006 was primarily due to the ramp up on several development programs including Non-Line of
Sight Launch System (NLOS) and Standard Missile-6. Sales also increased due to production on Advanced Medium
Range Air-to-Air Missile (AMRAAM) and Standard Missile-2, which received various international awards in 2006 and
Tube-launched Optically guided Wire controlled missile (TOW) which returned to full rate production following a gap
in 2005. These sales increases were partially offset by lower Paveway guided munitions production and the completion of
several classified programs.
Operating Income and Margin. The increase in operating income of $62 million in 2007 was primarily due to increased
volume.
The increase in operating income in 2006 was due to increased sales on several production and development programs.
Operating income in 2006 also included an award fee from a successful Standard Missile-3 flight test.
Backlog and Bookings. The $125 million decrease in backlog and the $1.1 billion decrease in bookings in 2007 compared
to 2006 were primarily driven by certain large development bookings in 2006 described below. In 2007, MS booked $691
million on Standard Missile Development and Production, $283 million for the TOW missiles, $247 million for ESSM
Production, a $253 million Tactical Tomahawk award, $237 million for Phalanx Weapons Systems for the U.S. Navy and
U.S. Army, $232 million for the design and development of the Mid Range Munition system, $145 million for the
production of Enhanced Paveway for an international customer, and $111 million for the production of Javelin for the
U.S. Army and U.S. Marines.
The $1.5 billion increase in backlog and $2.2 billion increase in bookings in 2006 compared to 2005 was mainly driven by
increased bookings in 2006 including $780 million for Kinetic Energy Interceptors (KEI) for additional development for
the Missile Defense Agency and $678 million for the EKV contract and $625 million on Standard Missile-3.
Network Centric Systems (NCS)
% Change
(In millions except percentages) 2007 2006 2005
2007
compared
to 2006
2006
compared
to 2005
Net Sales $4,164 $3,561 $3,205 16.9% 11.1%
Operating Income 506 379 333 33.5% 13.8%
Operating Margin 12.2% 10.6% 10.4%
Gross Bookings $3,904 $4,037 $3,698 -3.3% 9.2%
Total Backlog 5,102 5,059 4,307 0.8% 17.5%
NCS develops and produces net-centric mission solutions for networked sensors, command and control
communications, air traffic management and homeland security. In 2007, NCS continued developing and expanding its
international business and presence overseas. NCS had key initiatives into adjacent markets including border security,
civil communications and first responder interoperability as well as transportation solutions including open road tolling.
In addition, NCS was awarded the U.S. Navy’s Multiband Terminal (NMT) contract to develop and produce an advanced
satellite communication system for seamless assured connectivity between a ship’s or submarine’s computer network and
the Global Information Grid.
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