Raytheon 2012 Annual Report Download - page 64

56
Missile Systems
% Change
(In millions, except percentages) 2012 2011 2010
2012
compared
to 2011
2011
compared
to 2010
Total Net Sales $ 5,693 $ 5,590 $ 5,732 1.8 % (2.5)%
Total Operating Expenses
Cost of sales—labor 1,756 1,662 1,725 5.7 % (3.7)%
Cost of sales—materials and subcontractors 2,520 2,579 2,682 (2.3)% (3.8)%
Other cost of sales and other operating expenses 698 656 675 6.4 % (2.8)%
Total Operating Expenses 4,974 4,897 5,082 1.6 % (3.6)%
Operating Income $ 719 $ 693 $ 650 3.8 % 6.6 %
Operating Margin 12.6% 12.4% 11.3%
Change in Operating Income (in millions)
Year
Ended
2012
Versus
Year Ended
2011
Year Ended
2011 Versus
Year Ended
2010
Volume $ 10 $(26)
Net change in EAC adjustments (27)54
Mix and other performance 43 15
Total Change in Operating Income $ 26 $ 43
% Change
(In millions, except percentages) 2012 2011 2010
2012
compared
to 2011
2011
compared
to 2010
Bookings $ 7,135 $ 5,948 $ 6,485 20.0% (8.3)%
Total Backlog 10,030 8,570 8,212 17.0% 4.4 %
MS is a premier developer and producer of missile systems for the armed forces of the U.S. and other allied nations. Leveraging
its capabilities in advanced airframes, guidance and navigation systems, high-resolution sensors, targeting, and netted systems,
MS develops and supports a broad range of advanced weapon systems, including missiles, smart munitions, close-in weapon
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—Total net sales in 2012 were relatively consistent with 2011. Included in total net sales was $170 million of
higher net sales on the SM-3 program due to higher volume driven by scheduled increases in production and development
efforts, partially offset by $141 million of lower net sales on the Tomahawk program due to lower volume driven by scheduled
lower production rates. The remaining change in total net sales was spread across numerous programs with no individual or
common significant driver.
The decrease in total net sales of $142 million in 2011 compared to 2010 was primarily due to lower net sales of $210 million
on the SM-2 program, $90 million on the ESSM program, and $70 million on the SM-3 program, principally from lower
volume driven by scheduled lower production build rates. The decrease in net sales was partially offset by higher net sales of
$92 million on the SDB II program and $86 million on the Paveway™ program, principally from higher volume due to scheduled
increases in design and production efforts.
Total Operating Expenses—Total operating expenses in 2012 were relatively consistent with 2011. The increase in labor costs
of $94 million was primarily due to labor volume on the SM-3 program as a result of higher scheduled production rates. The
increase in other cost of sales and other operating expenses of $42 million was driven principally by a change in the amount
of previously deferred precontract costs based on contract awards or funding, which had an impact of $84 million, partially