Raytheon 2015 Annual Report Download - page 59

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Bookings (In millions) 2015 2014 2013
Integrated Defense Systems $ 7,044 $ 6,953 $ 5,869
Intelligence, Information and Services 4,761 5,205 4,964
Missile Systems 8,134 6,383 5,221
Space and Airborne Systems 4,936 5,410 5,996
Forcepoint 352 101 82
Total $25,227 $24,052 $22,132
Included in bookings were international bookings of $8,511 million, $8,362 million and $6,604 million in 2015, 2014, and
2013, respectively, which included foreign military bookings through the U.S. government. International bookings amounted
to 34%, 35% and 30% of total bookings in 2015, 2014, and 2013, respectively. Classified bookings amounted to 15% of total
bookings in 2015 and 2014 and 13% of total bookings in 2013.
We record bookings for not-to-exceed contract awards (e.g., undefinitized contract awards, binding letter agreements) based
on reasonable estimates of expected contract definitization, which generally will not be less than 75% of the award. We
subsequently adjust bookings to reflect the actual amounts definitized, or, when prior to definitization, when facts and
circumstances indicate that our previously estimated amounts are no longer reasonable. The timing of awards that may cover
multiple fiscal years influences the size of bookings in each year. Bookings exclude unexercised contract options and potential
orders under ordering-type contracts (e.g., indefinite-delivery, indefinite-quantity (IDIQ) type contracts), and are reduced for
contract cancellations and terminations of bookings recognized in the current year. We reflect contract cancellations and
terminations from prior year bookings, as well as the impact of changes in foreign exchange rates, directly as an adjustment
to backlog in the period in which the cancellation or termination occurs and the impact is determinable.
Backlog—We disclose period-ending backlog for each segment. Backlog represents the dollar value of firm orders for which
work has not been performed. Backlog generally increases with bookings and generally converts into sales as we incur costs
under the related contractual commitments. Therefore, we discuss changes in backlog, including any significant cancellations,
for each of our segments, as we believe such discussion provides an understanding of the awarded but not executed portions
of our contracts.
Funded Backlog Total Backlog
Backlog at December 31 (In millions) 2015 2014 2013 2015 2014 2013
Integrated Defense Systems $ 9,600 $ 8,939 $ 9,397 $11,842 $11,495 $10,916
Intelligence, Information and Services 2,294 2,854 2,550 5,154 5,825 5,811
Missile Systems 7,998 6,992 6,859 10,885 9,269 9,162
Space and Airborne Systems 4,692 4,259 4,166 6,309 6,930 7,751
Forcepoint(1) 476 48 42 479 52 45
Total $25,060 $23,092 $23,014 $34,669 $33,571 $33,685
(1) Forcepoint total backlog excludes the unfavorable impact of the acquisition accounting adjustments to record acquired deferred revenue at fair value.
Total backlog includes both funded backlog (firm orders for which funding is authorized, appropriated and contractually
obligated by the customer but for which work has not been performed) and unfunded backlog (firm orders for which funding
has not been appropriated and/or contractually obligated by the customer and for which work has not been performed). Revenue
is generally not recognized on backlog until funded. Backlog excludes unexercised contract options and potential orders under
ordering-type contracts (e.g., IDIQ). Both funded and unfunded backlog are affected by changes in foreign exchange rates.
Total Net Sales—We generally express changes in net sales in terms of volume. Volume generally refers to increases or
decreases in revenues related to varying amounts of total operating expenses, which are comprised of cost of sales and general
and administrative expenses, which include administrative and selling expenses (including bid and proposal costs) and research
and development expenses incurred on individual contracts (i.e., from performance against contractual commitments on our
bookings related to engineering, production or service activity). Therefore, we discuss volume changes attributable principally
to individual programs or product lines unless there is a discrete event (e.g., a major contract termination, natural disaster or
major labor strike), or some other unusual item that has a material effect on changes in a segment's volume for a reported
period. Due to the nature of our contracts, the amount of costs incurred and related revenues will naturally fluctuate over the