Raytheon 2012 Annual Report Download - page 58

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50
The $65 million increase in net EAC adjustments in 2012 compared to 2011 was primarily due to the impact of the UKBA
LOC Adjustment described above.
The $390 million increase in net EAC adjustments in 2011 compared to 2010 was primarily due to the impact of the UKBA
Program Adjustment described above.
Changes in contract mix and other program performance refer to changes in operating margin due to a change in the relative
volume of contracts with higher or lower fee rates such that the overall average margin rate for the segment changes and other
drivers of program performance, including margin rate increases or decreases due to EAC adjustments in prior periods. A
higher or lower expected fee rate at the initial award of a contract typically correlates to the contract's risk profile, which is
often specifically driven by the type of customer and related procurement regulations, the type of contract (e.g., fixed price
vs. cost plus), the maturity of the product or service, and the scope of work.
Because each segment has thousands of contracts in any reporting period, changes in operating income and margin are likely
to be due to normal changes in volume, net EAC adjustments, and contract mix and other performance on many contracts
with no single change, or series of related changes, materially driving a segment's change in operating income or operating
margin percentage.
Backlog—We disclose period-ending backlog for each segment. Backlog represents the dollar value of contracts awarded for
which work has not been performed. Backlog generally increases with bookings and generally converts into sales as we incur
costs under the related contractual commitments. Therefore, we discuss changes in backlog, including any significant
cancellations, for each of our segments, as we believe such discussion provides an understanding of the awarded but not
executed portions of our contracts.
Segment financial results were as follows:
Total Net Sales (In millions) 2012 2011 2010
Integrated Defense Systems $ 5,037 $ 4,958 $ 5,470
Intelligence and Information Systems 3,012 3,015 2,757
Missile Systems 5,693 5,590 5,732
Network Centric Systems 4,058 4,497 4,918
Space and Airborne Systems 5,333 5,255 4,830
Technical Services 3,239 3,353 3,472
Corporate and Eliminations (1,958)(1,877)(2,029)
Total $24,414 $24,791 $ 25,150
Operating Income (In millions) 2012 2011 2010
Integrated Defense Systems $ 918 $ 836 $ 870
Intelligence and Information Systems 247 159 (157)
Missile Systems 719 693 650
Network Centric Systems 495 667 692
Space and Airborne Systems 784 717 676
Technical Services 282 312 297
FAS/CAS Adjustment (255)(337)(187)
Corporate and Eliminations (201)(217)(228)
Total $ 2,989 $ 2,830 $ 2,613