Raytheon 2009 Annual Report Download - page 64

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The increase in net sales of $382 million in 2008 was primarily due to $362 million of higher net sales, principally from
higher volume, on a number of programs, including: $82 million on the AMRAAM program, which experienced higher
build rates on a large international order per the contractual schedule; $82 million on the RAM program, driven by
increased production on a direct foreign sale award received in the first half of 2007 and development work on the Block
II version of the missile; $72 million from higher production rates on the Phalanx program, per customer schedule
requirements; $64 million on the PavewayTM program, driven by increased production on international orders received in
the second half of 2007; and $62 million on the TOW program, which experienced higher production build rates due to
awards received in the fourth quarter of 2007. The increase in operating expenses of $341 million in 2008 was driven
primarily by the activity in the programs described above.
Operating Income and Margin—The increase in operating income of $20 million in 2009 was primarily due to higher
volume, which had a $12 million impact on operating income. Included in operating income for 2009 was improved
program performance of $26 million on the Phalanx program primarily as a result of the implementation of value
engineering change proposals (VECP), which reduced production costs, primarily from material and labor efficiencies.
MS’ operating income in 2008 included $25 million from higher award fees recognized on the Standard Missile-3
program driven by a successful flight test milestone. Operating margin in 2009 remained relatively consistent with 2008.
The increase in operating income of $41 million in 2008 was primarily due to higher volume, which had a $33 million
impact on operating income. Operating margin in 2008 remained consistent with 2007.
Backlog and Bookings—The decrease in backlog of $2,280 million at December 31, 2009 compared to December 31, 2008
was primarily due to the termination for convenience of the KEI program. The increase in backlog of $481 million at
December 31, 2008 compared to December 31, 2007 was primarily due to 2008 awards for the production of Standard
Missile-3 described below.
The decrease in bookings of $495 million in 2009 was primarily due to $318 million of awards for Standard Missile-3 for
the U.S. Navy and the MDA in 2009 compared to $1.2 billion in 2008. In 2009, MS booked $645 million for AMRAAM
systems for international customers and the U.S. Air Force, $514 million for Tube Launched, Optically Tracked, Wireless
missiles for international customers and the U.S. Army, $508 million for Evolved Sea Sparrow Missiles (ESSM) for
international customers and the U.S. Navy and $402 million for Phalanx Weapon Systems. MS also booked $384 million
on SM-2 for international customers and the U.S. Navy, $318 million for Standard Missile-3 for the MDA and $294
million for Tactical Tomahawk cruise missiles for the U.S. Navy.
The increase in bookings of $1.1 billion in 2008 was primarily due to awards for the production of Standard Missile-3 for
the U.S. Navy and the MDA. In 2008, MS booked $1.2 billion for the production of Standard Missile-3 for the U.S. Navy
and the MDA, $624 million for the production of the AMRAAM program for international customers and the U.S. Air
Force, $577 million on Standard Missile Development and Production, and $478 million for the production of Tactical
Tomahawk cruise missiles for the U.S. Navy.
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 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 Marine Corps.
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