Raytheon 2009 Annual Report Download - page 63

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margin in 2009 remained consistent with 2008. IIS’ operating margin was reduced by approximately 50 basis points in
2009 and approximately 90 basis points in 2008 by certain cybersecurity related acquisition costs and investments.
The increase in operating income of $5 million in 2008 was primarily due to increased volume, which had a $33 million
impact on operating income, partially offset by higher cybersecurity related acquisition costs and investments, which had
a $22 million impact on operating income. The decline in operating margin in 2008 was primarily due to the
cybersecurity related acquisition costs and investments noted above, which reduced operating margin by approximately
90 basis points in 2008 and approximately 20 basis points in 2007.
Backlog and Bookings—The decrease in backlog of $777 million at December 31, 2009 compared to December 31, 2008
was primarily due to lower 2009 bookings as discussed below. The decrease in backlog of $499 million at December 31,
2008 compared to December 31, 2007 was primarily due to large bookings in 2007 discussed below.
The decrease in bookings of $675 million in 2009 was primarily due to $426 million of lower classified bookings and $154
million of lower bookings on the U.K. e-Borders contract. In 2009, IIS booked $1,364 million on a number of classified
contracts compared to $1,790 million in 2008. Bookings in 2009 included $148 million and $123 million on two major
classified programs and $158 million on a contract to provide intelligence, surveillance and reconnaissance (ISR) to the
U.S. Air Force.
The decrease in bookings of $1.7 billion in 2008 was primarily due to $1.2 billion of lower bookings on the U.K.
e-Borders contract in 2008 compared to 2007 and the $781 million award for the National Polar-orbiting Operational
Environmental Satellite System (NPOESS) program in 2007, partially offset by higher classified bookings in 2008 as
described below. In 2008, IIS booked $1.8 billion on a number of classified contracts, including $379 million and $271
million on two major classified programs. In 2007, IIS booked $1.4 billion for the U.K. e-Borders contract, $1.4 billion on
a number of classified contracts, including $324 million and $178 million on two major classified programs; $781 million
on the NPOESS program and $101 million for the U.S. Air Force’s Consolidated Field Service contract to provide global
intelligence, surveillance and reconnaissance support.
Missile Systems
% Change
(In millions, except percentages) 2009 2008 2007
2009
compared
to 2008
2008
compared
to 2007
Total Net Sales $5,561 $5,408 $5,026 2.8% 7.6%
Total Operating Expenses 4,957 4,824 4,483 2.8% 7.6%
Operating Income 604 584 543 3.4% 7.6%
Operating Margin 10.9% 10.8% 10.8%
Bookings $5,548 $6,043 $4,954 -8.2% 22.0%
Total Backlog 7,657 9,937 9,456 -22.9% 5.1%
MS is a premier developer and producer of missile systems for the armed forces of the U.S. and other allied nations.
Leveraging its key capabilities in advanced airframes, guidance and navigation systems, high-resolution sensors, targeting
and netted systems, MS develops and supports a broad range of cutting edge weapon systems, including missiles, smart
munitions, close in weapons systems, projectiles, kinetic kill vehicles and directed energy effectors. Key customers include
the U.S. Navy, Army, Air Force and Marine Corps, the MDA and the armed forces of more than 40 allied nations.
Total Net Sales and Total Operating Expenses—The increase in net sales of $153 million in 2009 was primarily due to $76
million of higher net sales on the Standard Missile-3 program, principally from increased volume due to higher
subcontractor effort related to program deliveries along with increased development efforts, $60 million of higher net
sales on the Maverick Missile program due primarily to material costs resulting from international orders received in
2009, and $57 million of higher net sales related to development effort on a competitive missile program. The increase in
net sales was partially offset by $71 million in lower sales on the KEI program that was terminated for convenience in the
second quarter of 2009, as discussed above. The increase in operating expenses of $133 million in 2009 was driven
primarily by the activity in the programs described above.
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