Raytheon 2014 Annual Report Download - page 66

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Missile Systems
% Change
(In millions, except percentages) 2014 2013 2012
2014
compared
to 2013
2013
compared
to 2012
Total Net Sales $ 6,309 $ 6,599 $ 6,639 (4.4)% (0.6)%
Total Operating Expenses
Cost of sales—labor 1,934 2,009 1,977 (3.7)% 1.6 %
Cost of sales—materials and subcontractors 2,640 2,720 2,766 (2.9)% (1.7)%
Other cost of sales and other operating expenses 935 1,040 1,035 (10.1)% 0.5 %
Total Operating Expenses 5,509 5,769 5,778 (4.5)% (0.2)%
Operating Income $ 800 $ 830 $ 861 (3.6)% (3.6)%
Operating Margin 12.7% 12.6% 13.0%
Change in Operating Income (in millions)
Year
Ended
2014
Versus
Year Ended
2013
Year Ended
2013
Versus Year
Ended 2012
Volume $(33)$(1)
Net change in EAC adjustments 814
Mix and other performance (5)(44)
Total Change in Operating Income $(30)$(31)
% Change
(In millions, except percentages) 2014 2013 2012
2014
compared
to 2013
2013
compared
to 2012
Bookings $ 6,383 $ 5,221 $ 7,794 22.3% (33.0)%
Total Backlog 9,269 9,162 10,676 1.2% (14.2)%
MS is a premier developer and producer of missile and combat systems for the armed forces of the U.S. and other allied
nations. Leveraging its capabilities in advanced airframes, guidance and navigation systems, high-resolution sensors,
surveillance, targeting, and netted systems, MS develops and supports a broad range of advanced weapon systems, including
missiles, smart munitions, close-in weapon systems, projectiles, kinetic kill vehicles, directed energy effectors and advanced
combat sensor solutions. Key customers include the U.S. Navy, Army, Air Force and Marine Corps, the MDA and the armed
forces of more than 40 allied nations.
Total Net Sales—The decrease in total net sales of $290 million in 2014 compared to 2013 was primarily due to $298 million
of lower net sales on land warfare systems programs driven principally by planned declines in production due to the U.S.
Army budget environment.
Total net sales in 2013 were relatively consistent with 2012. Included in total net sales was $247 million of lower net sales
on U.S. Army sensor programs driven principally by planned declines in production due to the U.S. Army budget environment
and higher net sales of $156 million on an international Paveway™ program due to planned production increases and
development efforts and $114 million on an air warfare systems program due to higher volume driven by scheduled increases
in production and development efforts. 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 $260 million in 2014 compared to 2013 was primarily
due to a decrease in other cost of sales and other operating expenses of $105 million and a decrease in labor costs of $75
million, both driven principally by the land warfare systems programs as described above in Total Net Sales.