Raytheon 2012 Annual Report Download - page 61

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Total Operating Expenses—Total operating expenses in 2012 remained relatively consistent with 2011. The decrease in other
cost of sales and other operating expenses of $41 million was primarily due to lower outside service costs due to the scheduled
completion of an international global integrated sensors program.
The decrease in total operating expenses of $478 million in 2011 compared to 2010 was primarily due to the decreased volume
on a U.S. Navy combat systems program and an international Patriot program for the reasons described above in Total Net
Sales. The decrease in materials and subcontractor costs of $393 million was driven primarily by the decreased volume on
these programs and the types of costs incurred in the respective periods based on the program requirements and program
schedules. The decrease in labor costs of $97 million in 2011 compared to 2010 was primarily due to lower net sales on
numerous missile defense programs, driven principally by lower volume due to the completion of scheduled program design,
development and production efforts, and decreased volume on a U.S. Navy combat systems program for the reasons described
above in Total Net Sales.
Operating Income and Margin—The increase in operating income of $82 million in 2012 compared to 2011 was primarily
due to a change in mix and other performance of $81 million, principally driven by increased activity on certain international
Patriot programs. The increase in operating margin in 2012 compared to 2011 was primarily due to the change in mix and
other performance.
The decrease in operating income of $34 million in 2011 compared to 2010 was primarily due to decreased volume of $73
million, principally driven by the programs described above in Total Net Sales, partially offset by a net change in EAC
adjustments of $34 million, driven primarily by the amount of EAC adjustments on a U.S. Navy combat systems program.
The increase in operating margin in 2011 compared to 2010 was primarily due to the net change in EAC adjustments described
above.
Backlog and Bookings—Backlog was $9,431 million, $9,766 million and $8,473 million at December 31, 2012, 2011 and
2010, respectively. The decrease in backlog of $335 million or 3% at December 31, 2012 compared to December 31, 2011
was primarily due to sales in excess of bookings in 2012, principally across our Integrated Air & Missile Defense product
line. The increase in backlog of $1,293 million at December 31, 2011 compared to December 31, 2010 was primarily due to
higher bookings in 2011 described below.
Bookings decreased by $1,724 million in 2012 compared to 2011, primarily due to the large 2011 Patriot air and missile
defense system booking for the Kingdom of Saudi Arabia described below. In 2012, IDS booked $422 million for production
and sustainment of U.S. Army/U.S. Navy Transportable Radar Surveillance (AN/TPY-2) radars for the Missile Defense Agency
(MDA), $366 million on the Zumwalt-class destroyer program for the U.S. Navy, $301 million to provide Patriot engineering
services support for U.S. and international customers, $293 million to provide technical and logistics support for a Hawk and
Patriot air and missile defense program for an international customer, $293 million on an Early Warning Surveillance Radar
System (EWSRS) support program for Taiwan, $240 million to provide engineering services, production and support for the
Aegis weapon system for the U.S. Navy, $199 million to provide Consolidated Contractor Logistics Support (CCLS) for the
MDA, $198 million for the production of Airborne Low Frequency Sonar (ALFS) systems for the U.S. Navy, $184 million
to provide advanced Patriot air and missile defense capability for an international customer, $172 million for the Upgraded
Early Warning Radar (UEWR) system for the MDA and the U.S. Air Force, and $126 million to provide air and missile defense
capability for the U.S. Army.
Bookings increased by $3,123 million in 2011 compared to 2010. In 2011, IDS booked $3,147 million for the Patriot Air
and Missile Defense System, including $1,698 million for the Kingdom of Saudi Arabia, $560 million for Taiwan, $340 million
for other international customers, and $257 million to provide engineering services support for U.S. and international customers.
IDS booked $1,027 million for AN/TPY-2 radars, spares and training for the United Arab Emirates (UAE), MDA and U.S.
Army. IDS also booked $345 million on the Zumwalt-class destroyer program for the U.S. Navy, $268 million for the production
of ALFS systems and spares for the U.S. Navy and the Australian Navy, $193 million to provide CCLS for the MDA, and
$107 million for development on the competitively awarded Space Fence program for the U.S. Air Force.
In 2010, IDS booked $400 million to provide advanced Patriot air and missile defense capability for an international customer,
$271 million on the Zumwalt-class destroyer program for the U.S. Navy, $228 million on the Aegis weapon system for the
U.S. Navy, $222 million to provide engineering services support for a Patriot air and missile defense program for U.S. and
international customers, $190 million for AN/TPY-2 radar for the MDA, $148 million to provide CCLS for the MDA, $131