Raytheon 2014 Annual Report Download - page 42

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33
(In millions) 2014 2013 2012
International sales(1) $ 6,541 $ 6,446 $ 6,232
International bookings 8,362 6,604 5,979
(1) Includes foreign military sales through the U.S. Government.
Focus on the Customer and Execution
Our customer focus continues to be a critical part of our strategy—underpinned by a focus on performance, relationships and
solutions. Performance means being able to meet customer commitments which is ensured through strong processes, metrics
and oversight. We maintain a “process architecture” that spans our four businesses and our broad programs and pursuits. It
consists of enterprise-wide processes and systems such as our Integrated Product Development System (IPDS), which assures
consistency of evaluation and execution at each step in a program's life-cycle; Product Data Management (PDM), which is
our business system software for engineering; Achieving Process Excellence (APEX), which is our SAP business system
software for accounting, finance and program management; Process Re-Invention Integrating Systems for Manufacturing
(PRISM), which is our SAP software for manufacturing operations; Advanced Company Estimating System (ACES), which
is our cost proposal system; and Raytheon Enterprise Supplier Assessment (RESA) tool for Supply Chain Management. These
processes and systems are linked to an array of front-end and back-end metrics. With this structure, we are able to track results
and be alerted to potential issues through numerous oversight mechanisms, including operating reviews and annual operating
plan reviews.
We are also continuing to build strong customer relationships by working with them as partners and including them on Raytheon
Six SigmaTM teams to jointly improve their programs and processes. We are increasingly focused on responding to our
customers' changing requirements with rapid and effective solutions to real-world problems. In recognition of our customers'
constraints and priorities, we also continue to drive various cost reductions across the Company by continuing to focus on
enterprise collaboration and improving productivity and strong execution throughout our programs. We have worked to reduce
costs across the Company, improve efficiencies in our production facilities, and continue to increase value through Raytheon
Six SigmaTM, the implementation of lean processes, reduced cycle times and strategic supply chain initiatives, in addition to
other initiatives.
FINANCIAL SUMMARY
We use the following key financial performance measures to manage our business on a consolidated basis and by business
segment, and to monitor and assess our results of operations:
– Bookings—a forward-looking metric that measures the value of firm orders awarded to us during the year;
– Net Sales—a growth metric that measures our revenue for the current year;
– Operating Income—a measure of our profit from continuing operations for the year, before non-operating expenses, net
and taxes; and
– Operating Margin—a measure of our operating income as a percentage of total net sales.
(In millions, except for percentages) 2014 2013 2012
Bookings $ 24,052 $ 22,132 $ 26,504
Total backlog 33,571 33,685 36,181
Total net sales 22,826 23,706 24,414
Total operating income(1) 3,179 2,938 2,989
Total operating margin 13.9% 12.4% 12.2%
Operating cash flow from continuing operations $ 2,064 $ 2,382 $ 1,951
(1) Includes FAS/CAS Adjustment, described below in Critical Accounting Estimates, of $286 million of income, and $249 million and $255 million of
expense in 2014, 2013 and 2012, respectively.
We also focus on earnings per share (EPS), including Adjusted EPS, and measures to assess our cash generation and the
efficiency and effectiveness of our use of capital, such as free cash flow (FCF) and return on invested capital (ROIC).
Considered together, we believe these metrics are strong indicators of our overall performance and our ability to create
shareholder value. We feel these measures are balanced among long-term and short-term performance, efficiency and growth.
We also use these and other performance metrics for executive compensation purposes.