Raytheon 2013 Annual Report Download - page 19

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9
authorizing such exports. During that time, Congress may take action to block or delay a proposed export by joint resolution
which is subject to Presidential veto. Additional information regarding the risks associated with our international business is
contained in Item 1A “Risk Factors” of this Form 10-K.
Backlog
% of Total Backlog
(In millions, except percentages) 2013 2012 2013 2012
Total backlog $ 33,685 $ 36,181 100% 100%
Total backlog to the U.S. Government(1) 20,985 23,090 62% 64%
Total foreign military sales backlog 4,884 5,443 14% 15%
Total direct foreign government backlog 6,926 6,789 21% 19%
Total non-government foreign backlog 551 444 2% 1%
Total non-U.S. Government domestic backlog 339 416 1% 1%
Total international backlog(2) 12,361 12,675 37% 35%
(1) Excludes foreign military sales backlog through the U.S. Government.
(2) Includes foreign military sales backlog through the U.S. Government.
Approximately $16.9 billion of the 2013 year-end backlog is not expected to be filled during the following twelve months.
These amounts include both funded backlog (unfilled orders for which funding is authorized, appropriated and contractually
obligated by the customer) and unfunded backlog (firm orders for which funding has not been appropriated or obligated to
us). For additional information related to backlog figures, see “Segment Results” within Item 7 of this Form 10-K.
Research and Development
We conduct extensive research and development activities to continually enhance our existing products and services, and
develop new products and services to meet our customers’ changing needs and requirements, and address new market
opportunities. During 2013 we expended $465 million on research and development efforts compared to $451 million and
$450 million in 2012 and 2011, respectively. These expenditures principally have been for product development for the U.S.
Government. We also conduct funded research and development activities under U.S. Government contracts which are included
in total net sales. For additional information related to our research and development activities, see “Note 1: Summary of
Significant Accounting Policies” within Item 8 of this Form 10-K.
Raw Materials, Suppliers and Seasonality
We are dependent upon the delivery of materials by suppliers, and the assembly of major components and subsystems by
subcontractors used in our products. Some products require relatively scarce raw materials. In addition, we must comply with
specific procurement requirements which may, in effect, limit the suppliers and subcontractors we may utilize. In some
instances, for a variety of reasons, we are dependent on sole-source suppliers. We enter into long-term or volume purchase
agreements with certain suppliers and take other actions to ensure the availability of needed materials, components and
subsystems. We are also dependent on suppliers to provide genuine original equipment manufacturer parts and have a robust
set of standardized policies to detect counterfeit material, especially electronic components, throughout our supply chain. We
generally have not experienced material difficulties in procuring the necessary raw materials, components and other supplies
for our products. We also are subject to rules promulgated by the Securities Exchange Commission (SEC) in 2012 pursuant
to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 that require us to conduct due diligence on and
disclose if we are able to determine whether certain materials (including tantalum, tin, gold and tungsten), known as conflict
minerals, that originate from mines in the Democratic Republic of the Congo or certain adjoining countries (DRC), are used
in our products. The first DRC minerals report is due in the second quarter of 2014 for the 2013 calendar year and we are
conducting appropriate diligence measures to comply with such requirements.
In recent years, our revenues in the second half of the year have generally exceeded revenues in the first half. The timing of
new program awards, the availability of U.S. Government funding, the timing of international contract awards and product
delivery schedules are among the factors affecting the periods in which revenues are recorded. We expect this trend to continue
in 2014.