Raytheon 2011 Annual Report Download - page 66

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58
The increase in net sales of $248 million in 2010 compared to 2009 was primarily due to $235 million of higher net sales
from higher volume, as planned, as work increased on certain classified business awarded principally in the first half of 2009,
$87 million of higher net sales on a multi-spectral targeting system program driven by increased planned production efforts
to meet the program delivery schedule and $75 million of higher net sales from higher volume, as planned, as production
work increased on an international airborne tactical radar program awarded in the first quarter of 2010. The increase in net
sales was partially offset by $111 million of lower net sales from lower volume, as planned, as an advanced targeting program
moved toward completion.
Total Operating Expenses—The increase in operating expenses of $384 million in 2011 compared to 2010 was primarily due
to the activity described above. The increase in materials and subcontractor costs of $188 million was driven primarily by
the timing of program requirements, principally on the ISR systems production programs and on the international airborne
tactical radar program for the reasons described above in Total Net Sales. The increases in labor of $109 million and in other
cost of sales and other operating expenses of $87 million compared to 2010 were primarily related to RAST.
The increase in operating expenses of $207 million in 2010 compared to 2009 was primarily due to certain classified business,
the multi-spectral targeting system program and the international airborne tactical radar program for the reasons described
above in Total Net Sales, offset by the activity on an advanced targeting program for the reasons described above in Total Net
Sales. The increase in materials and subcontractor costs of $157 million was driven primarily by the timing of program
requirements, principally on classified business awarded in the first half of 2009.
Operating Income and Margin—The increase in operating income of $41 million in 2011 compared to 2010 was primarily
due to higher volume of $43 million, principally driven by the activity on the programs described above in Total Net Sales
and net change in EAC adjustments of $16 million, driven primarily by the amount of EAC adjustments on a international
airborne tactical radar program and on an advanced targeting program, partially offset by a change in contract mix and other
performance of $18 million. Included in contract mix and other performance was $41 million of acquisition-related costs for
RAST, partially offset by the 2011 impact of the mix of contracts completing and new contract awards. Operating margin in
2011 remained relatively consistent with 2010.
The increase in operating income of $41 million in 2010 compared to 2009 was primarily due to higher volume, which had
a $28 million impact on operating income and the net change in EAC adjustments of $10 million driven primarily by labor
and material production efficiencies spread across numerous programs with no individual or common significant driver.
Included in EAC adjustments in 2009 was a $19 million favorable settlement of affirmative claims and the resolution of a
contract termination. Operating margin in 2010 remained relatively consistent with 2009.
Backlog and Bookings—Backlog remained relatively consistent and was $5,864 million, $5,981 million and $5,921 million
at December 31, 2011, 2010 and 2009, respectively.
Bookings increased by $271 million in 2011 compared to 2010. In 2011, SAS booked $782 million on an international Active
Electronically Scanned Array (AESA) program for F-15's to the Kingdom of Saudi Arabia, $291 million for the production
of AESA radars for the U.S. Air Force, U.S. Navy and the Air National Guard, and $78 million on radar contracts for an
international customer. SAS also booked $954 million on a number of classified contracts.
Bookings in 2010 remained relatively consistent with 2009. In 2010, SAS booked $1,106 million on a number of classified
contracts, including $332 million on a major classified space program. In 2010, SAS also booked $618 million for the production
of AESA radars for the U.S. Air Force, U.S. Navy, Air National Guard and international customers and $90 million for the
production of Advanced Countermeasures Electronic System (ACES) for Egypt.
In 2009, SAS booked $422 million to supply APG-63 fire control radars and support equipment for the Japan Air Self-Defense
Force, $295 million for the B-2 RMP and $147 million on the Integrated Sensor Is Structure (ISIS) radar program for the
Defense Advanced Research Projects Agency (DARPA). SAS also booked $1,330 million on a number of classified contracts.