Raytheon 2015 Annual Report Download - page 58

48
The decrease in diluted EPS attributable to Raytheon Company common stockholders of $0.38 in 2015 compared to 2014
was primarily due to the $0.22 decrease in diluted EPS from continuing operations attributable to Raytheon Company common
stockholders described above in Diluted EPS from Continuing Operations Attributable to Raytheon Company Common
Stockholders and the $0.17 decrease in diluted EPS from discontinued operations described above in Diluted EPS from
Discontinued Operations Attributable to Raytheon Company Common Stockholders. The increase of $1.02 in 2014 compared
to 2013 was primarily due to the increase in diluted EPS from continuing operations attributable to Raytheon Company
common stockholders of $1.01 described above in Diluted EPS from Continuing Operations Attributable to Raytheon Company
Common Stockholders.
SEGMENT RESULTS
In May 2015, we completed a series of transactions with Vista Equity Partners by which we acquired Websense and combined
it with RCP, formerly part of our IIS segment, and then sold a minority interest in the combined company to Vista Equity
Partners to establish Forcepoint, a new cybersecurity joint venture company (with Vista Equity Partners). In connection with
these transactions, we reorganized our operating and reporting structure with Forcepoint as our fifth reporting segment. We
report our results in the following segments: IDS; IIS; MS; SAS; and Forcepoint.
The amounts, discussion and presentation of our business segments, including Corporate and eliminations for intersegment
activity, set forth in this Form 10-K, reflect the Forcepoint transaction. The Forcepoint results reflect RCP results for all periods
and Websense results after the acquisition date of May 29, 2015. None of the changes impact our previously reported
consolidated balance sheets, statements of operations or statements of cash flows. See "Note 16: Business Segment Reporting"
within Item 8 of this Form 10-K for additional information.
In addition, effective January 1, 2016, we reorganized certain product areas of our IDS and IIS businesses to more efficiently
leverage our capabilities, but because this change occurred after December 31, 2015, the amounts, discussion and presentation
of our financial results for purposes of this Form 10-K do not reflect this change. Rather, our structure as of December 31,
2015 is reflected.
The following provides some context for viewing our segment performance through the eyes of management.
Given the nature of our business, bookings, net sales, and operating income (and the related operating margin percentage),
which we disclose and discuss at the segment level, are most relevant to an understanding of management’s view of our
segment performance, and often these measures have significant interrelated effects, as described below. In addition, we
disclose and discuss backlog, which represents future sales that we expect to recognize over the remaining contract period,
which is generally several years. We also disclose cost of sales and the components of cost of sales within our segment
disclosures.
Bookings—We disclose the amount of bookings and notable contract awards for each segment. Bookings generally represent
the dollar value of new contracts awarded to us during the reporting period and include firm orders for which funding has not
been appropriated. We believe bookings are an important measure of future performance and are an indicator of potential
future changes in total net sales, because we cannot record revenues under a new contract without first having a booking in
the current or a preceding period.
Bookings are impacted by the timing and amounts of awards in a given period, which are subject to numerous factors, including
the desired capability by the customer and urgency of customer needs; fiscal constraints placed on customer budgets; political
uncertainty; the timing of customer negotiations; the timing of governmental approvals and notifications; and the timing of
option exercises or increases in scope. In addition, due to these factors, quarterly bookings tend to fluctuate from period to
period, particularly on a segment basis. As a result, we believe comparing bookings on a quarterly basis or for periods less
than one year is less meaningful than for longer periods and that shorter term changes in bookings may not necessarily indicate
a material trend.