Raytheon 2014 Annual Report Download - page 61

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52
higher or lower expected fee rate at the initial award of a contract typically correlates to the contract's risk profile, which is
often specifically driven by the type of customer and related procurement regulations, the type of contract (e.g., fixed price
vs. cost plus), the maturity of the product or service, and the scope of work. Changes in contract mix and other performance
also include all other items which are not related to volume or EAC adjustments.
Because each segment has thousands of contracts in any reporting period, changes in operating income and margin are likely
to be due to normal changes in volume, net EAC adjustments, and contract mix and other performance on many contracts
with no single change, or series of related changes, materially driving a segment's change in operating income or operating
margin percentage.
Operating income by segment was as follows:
Operating Income (In millions) 2014 2013 2012
Integrated Defense Systems $ 974 $ 1,115 $ 1,047
Intelligence, Information and Services 508 510 536
Missile Systems 800 830 861
Space and Airborne Systems 846 920 988
FAS/CAS Adjustment 286 (249)(255)
Corporate and Eliminations (235)(188)(188)
Total $ 3,179 $ 2,938 $ 2,989
Integrated Defense Systems
% Change
(In millions, except percentages) 2014 2013 2012
2014
compared
to 2013
2013
compared
to 2012
Total Net Sales $ 6,085 $ 6,489 $ 6,492 (6.2)% — %
Total Operating Expenses
Cost of sales—labor 2,039 2,272 2,292 (10.3)% (0.9)%
Cost of sales—materials and subcontractors 2,096 2,149 2,229 (2.5)% (3.6)%
Other cost of sales and other operating expenses 976 953 924 2.4 % 3.1 %
Total Operating Expenses 5,111 5,374 5,445 (4.9)% (1.3)%
Operating Income $ 974 $ 1,115 $ 1,047 (12.6)% 6.5 %
Operating Margin 16.0% 17.2% 16.1%
Change in Operating Income (in millions)
Year
Ended
2014
Versus
Year Ended
2013
Year Ended
2013
Versus Year
Ended 2012
Volume $(47)$(13)
Net change in EAC adjustments (55)(7)
Mix and other performance (39)88
Total Change in Operating Income $(141)$ 68
% Change
(In millions, except percentages) 2014 2013 2012
2014
compared
to 2013
2013
compared
to 2012
Bookings $ 6,953 $ 5,869 $ 6,633 18.5% (11.5)%
Total Backlog 11,495 10,916 11,656 5.3% (6.3)%