Raytheon 2012 Annual Report Download - page 71

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63
The decrease in total operating expenses of $134 million in 2011 compared to 2010 was driven primarily by the activity on
the DTRA and training programs for the reasons described above in Total Net Sales. The decrease in materials and subcontractor
costs of $239 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 materials and subcontractor
costs was partially offset by higher labor of $102 million driven primarily by training programs supporting the U.S. Army's
Warfighter FOCUS activities due to a change in customer determined activities.
Operating Income and Margin—The decrease in operating income of $30 million in 2012 compared to 2011 was primarily
due to a net change in EAC adjustments of $33 million driven primarily by operational efficiencies in 2011 on various
customized engineering and depot support programs. The decrease in operating margin in 2012 compared to 2011 was primarily
due to the net change in EAC adjustments.
The increase in operating income of $15 million in 2011 compared to 2010 was primarily due to a change in contract mix and
other performance of $13 million, primarily driven by cost efficiencies and higher award fees associated with various training
programs, which had an impact of $8 million. Operating income also increased due to a net change in EAC adjustments of
$11 million, primarily driven by cost efficiencies on a weapon production and modification program, which had a $7 million
impact on operating income. The increases in operating income were partially offset by lower volume, which had a $9 million
impact on operating income. The increase in operating margin in 2011 compared to 2010 was primarily due to the change in
net change in EAC adjustments and the contract mix and other performance described above.
Backlog and Bookings—Backlog remained relatively consistent and was $2,336 million, $2,586 million and $2,654 million
at December 31, 2012, 2011 and 2010, respectively.
Bookings decreased by $223 million in 2012 compared to 2011. In 2012, TS booked $900 million on domestic training
programs and $394 million on foreign training programs in support of the Warfighter FOCUS activities and $246 million for
work on the Air Traffic Control Optimum Training Solution (ATCOTS) contract to maintain and improve air traffic control
(ATC) training and support the FAA in meeting the current and future ATC demands.
Bookings increased by $143 million in 2011 compared to 2010. In 2011, TS booked $994 million on domestic training programs
and $347 million on foreign training programs in support of the Warfighter FOCUS activities, $150 million to provide
operational and logistics support to the NSF Office of Polar Programs, $120 million to design, develop and deliver technical
training to a commercial customer, and $100 million with Australia for base operations, maintenance and support services at
the Harold E. Holt Naval Communications station.
In 2010, TS booked $952 million on domestic training programs and $328 million on foreign training programs in support of
the Warfighter FOCUS activities, $173 million to provide operational and logistics support to the NSF Office of Polar Programs
and $88 million on the Security Equipment Integration Services (SEIS) contract for the Transportation Security Administration
(TSA).
FAS/CAS Adjustment
The FAS/CAS Adjustment represents the difference between our pension and other postretirement benefit (PRB) expense or
income under Financial Accounting Standards (FAS) requirements under GAAP and our pension and PRB expense under
U.S. Government cost accounting standards (CAS). The results of each segment only include pension and PRB expense under
CAS that we generally recover through the pricing of our products and services to the U.S. Government.
The components of the FAS/CAS Adjustment were as follows:
(In millions) 2012 2011 2010
FAS/CAS Pension Adjustment $(255)$(340)$
(230)
FAS/CAS PRB Adjustment —3 43
FAS/CAS Adjustment $(255)$(337)$
(187)