Raytheon 2013 Annual Report Download - page 69

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Total net sales in 2012 were relatively consistent with 2011. Included in total net sales was $100 million of higher net sales
due to increased volume on an international tactical airborne radar program primarily due to program schedule requirements.
Also included in total net sales was $107 million of lower net sales on certain radio and communications programs driven
principally by reduced customer program requirements, $97 million of lower net sales due to lower volume on certain sensor
systems programs due to program schedule requirements and $85 million of lower net sales of acoustic sensor systems due
to higher 2011 deliveries based on customer demand. The remaining change in total net sales was spread across numerous
programs with no individual or common significant driver.
Total Operating Expenses—The decrease in total operating expenses of $384 million in 2013 compared to 2012 was primarily
due to a decrease in materials and subcontractors costs of $401 million, primarily due to the activity on the programs described
above in Total Net Sales.
Total operating expenses in 2012 were relatively consistent with 2011. The increase in other cost of sales and other operating
expenses of $53 million was primarily due to the timing and amount of adjustments for loss contracts.
Operating Income and Margin—The decrease in operating income of $68 million in 2013 compared to 2012 was due to a
decrease in volume of $56 million and a net change in EAC adjustments of $46 million, partially offset by a change in mix
and other performance of $34 million. The decrease in volume was driven principally by the programs described above in
Total Net Sales. The net change in EAC adjustments was principally from higher EAC adjustments in 2012 on integrated
communications systems programs as a result of material and labor efficiencies spread across various production programs.
The increase in mix and other performance was primarily due to $34 million of income in 2013 from certain license royalties
based on third-party usage compared with $4 million in 2012, partially offset by $45 million of acquisition-related costs in
2013 compared with $33 million in 2012. Operating margin in 2013 was relatively consistent with 2012.
The increase in operating income of $37 million in 2012 compared to 2011 was primarily due to a net change in EAC adjustments
of $79 million principally as a result of material and support efficiencies and contract modifications on international tactical
airborne radar programs and certain classified programs, partially offset by a change in mix and other performance of $40
million driven primarily by reduced deliveries of acoustic sensor systems. Included in mix and other performance in 2012
and 2011 was $33 million and $53 million, respectively, of acquisition-related costs. The increase in operating margin in 2012
compared to 2011 was primarily due to the net change in EAC adjustments and the change in mix and other performance.
Backlog and Bookings—Backlog was $7,751 million, $7,440 million and $7,292 million at December 31, 2013, 2012 and
2011, respectively. The increase in backlog of $311 million or 4% at December 31, 2013 compared to December 31, 2012
was primarily due to bookings in excess of sales, principally within our Tactical Airborne Systems product line. Backlog at
December 31, 2012 was relatively consistent with December 31, 2011.
The bookings decrease of $611 million in 2013 compared to 2012 was driven primarily by the $998 million decrease in the
specifically disclosed bookings below. In 2013, SAS booked $825 million on radar contracts for international customers, $210
million to provide Multi-Spectral Targeting Systems (MTS) for unmanned aerial vehicles to the U.S. Air Force, and $132
million for the Navy Multiband Terminal (NMT) program for the U.S. Navy. SAS also booked $862 million on a number of
classified contracts.
The bookings increase of $562 million in 2012 compared to 2011 was driven primarily by the $826 million increase in the
specifically disclosed bookings below. In 2012, SAS booked $617 million on radar contracts for international customers, $205
million to provide MTS for unmanned aerial vehicles to the U.S. Air Force, $187 million for the NMT program for the U.S.
Navy, $77 million for the production of radar warning receivers for the U.S. Navy, and $76 million for the production of the
Multi-Platform Radar Technology Insertion Program (MP-RTIP) surveillance system for NATO. SAS also booked $1,865
million on a number of classified contracts.
In 2011, SAS booked $782 million on an international Active Electronically Scanned Array (AESA) program for F-15's to
the Kingdom of Saudi Arabia, $291 million for the production of AESA radars for the U.S. Air Force, U.S. Navy and the Air
National Guard, $78 million on radar contracts for an international customer and $64 million for Enhanced Position Location
Reporting System (EPLRS) and MicroLight® radios from the Australian Defence Materiel Organisation (DMO). SAS also
booked $986 million on a number of classified contracts.