RAYTHEON CO/ | 2013 | FY | 3


Business Segment Reporting
Our reportable segments, organized based on capabilities and technologies, are: IDS; IIS; MS; and SAS.
 
IDS is a leader in integrated air and missile defense; radar solutions; naval combat and ship electronic systems; command, control, communications, computers and intelligence (C4I) solutions; and international and domestic Air Traffic Management (ATM) systems. IDS delivers combat-proven performance against the complete spectrum of airborne and ballistic missile threats and is a world leader in the technology, development, and production of sensors and mission systems.
 
IIS provides a full range of technical and professional services to intelligence, defense, federal and commercial customers worldwide. IIS specializes in global Intelligence, Surveillance and Reconnaissance (ISR), navigation, DoD space and weather solutions, cybersecurity, analytics, training, logistics, mission support, and engineering and sustainment solutions. Key customers include the U.S. Intelligence Community, DoD agencies, the U.S. Armed Forces, the FAA, the National Oceanic and Atmospheric Administration (NOAA), Department of Homeland Security (DHS), the National Aeronautics and Space Administration (NASA) and an increasing number of international customers.

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.
 
SAS is a leader in the design and development of integrated sensor and communication systems for advanced missions, including traditional and non-traditional ISR, precision engagement, unmanned aerial operations, and space. Leveraging advanced concepts, state-of-the-art technologies and mission systems knowledge, SAS provides electro-optical/infrared sensors, airborne radars for surveillance and fire control applications, lasers, precision guidance systems, signals intelligence systems, processors, electronic warfare systems, communication systems, and space-qualified systems for civil and military applications.
 
Segment total net sales and operating income generally include intersegment sales and profit recorded at cost plus a specified fee, which may differ from what the selling entity would be able to obtain on sales to external customers. Corporate and Eliminations includes corporate expenses and intersegment sales and profit eliminations. Corporate expenses represent unallocated costs and certain other corporate costs not considered part of management’s evaluation of reportable segment operating performance.

Segment financial results were as follows: 
Total Net Sales (in millions)
2013

 
2012

 
2011

Integrated Defense Systems
$
6,489

 
$
6,492

 
$
6,441

Intelligence, Information and Services
6,045

 
6,335

 
6,470

Missile Systems
6,599

 
6,639

 
6,801

Space and Airborne Systems
6,371

 
6,823

 
6,818

Corporate and Eliminations
(1,798
)
 
(1,875
)
 
(1,739
)
Total
$
23,706

 
$
24,414

 
$
24,791

Intersegment Sales (in millions)
2013

 
2012

 
2011

Integrated Defense Systems
$
107

 
$
91

 
$
83

Intelligence, Information and Services
817

 
784

 
741

Missile Systems
163

 
161

 
182

Space and Airborne Systems
711

 
839

 
733

Total
$
1,798

 
$
1,875

 
$
1,739

Operating Income (in millions)
2013

 
2012

 
2011

Integrated Defense Systems
$
1,115

 
$
1,047

 
$
998

Intelligence, Information and Services
510

 
536

 
480

Missile Systems
830

 
861

 
939

Space and Airborne Systems
920

 
988

 
951

FAS/CAS Adjustment
(249
)
 
(255
)
 
(337
)
Corporate and Eliminations
(188
)
 
(188
)
 
(201
)
Total
$
2,938

 
$
2,989

 
$
2,830



We must calculate our pension and other postretirement benefits (PRB) costs under both Financial Accounting Standards (FAS) requirements under GAAP and U.S. Government cost accounting standards (CAS). GAAP outlines the methodology used to determine pension expense or income for financial reporting purposes, which is not indicative of the funding requirements for pension and PRB plans that we determine by other factors. CAS prescribes the allocation to and recovery of pension and other PRB costs on U.S. Government contracts. The results of each segment only include pension and PRB expense as determined under CAS. The CAS requirements for pension costs and its calculation methodology differ from the FAS requirements and calculation methodology. As a result, while both FAS and CAS use long-term assumptions in their calculation methodologies, each method results in different calculated amounts of pension and PRB cost. The FAS/CAS Adjustment, which is reported as a separate line in our segment results above, represents the difference between our pension and PRB expense or income under FAS in accordance with GAAP and our pension and PRB expense under CAS.

The components of operating income related to Corporate and Eliminations were as follows: 
(In millions)
2013

 
2012

 
2011

Intersegment profit eliminations
$
(160
)
 
$
(177
)
 
$
(161
)
Corporate
(28
)
 
(11
)
 
(40
)
Total
$
(188
)
 
$
(188
)
 
$
(201
)
Intersegment Operating Income (in millions)
2013

 
2012

 
2011

Integrated Defense Systems
$
9

 
$
8

 
$
7

Intelligence, Information and Services
72

 
72

 
68

Missile Systems
17

 
24

 
20

Space and Airborne Systems
62

 
73

 
66

Total
$
160

 
$
177

 
$
161



Capital Expenditures (in millions)
2013

 
2012

 
2011

Integrated Defense Systems
$
69

 
$
67

 
$
91

Intelligence, Information and Services
28

 
34

 
51

Missile Systems
55

 
66

 
81

Space and Airborne Systems
117

 
132

 
98

Corporate
11

 
40

 
19

Total
$
280

 
$
339

 
$
340



Depreciation and Amortization (in millions)
2013

 
2012

 
2011

Integrated Defense Systems
$
96

 
$
101

 
$
98

Intelligence, Information and Services
62

 
65

 
63

Missile Systems
76

 
68

 
66

Space and Airborne Systems
158

 
161

 
162

Corporate
53

 
60

 
55

Total
$
445

 
$
455

 
$
444



Total Assets (in millions)
2013

 
2012

Integrated Defense Systems
$
3,897

 
$
3,710

Intelligence, Information and Services
3,772

 
3,827

Missile Systems
6,316

 
6,319

Space and Airborne Systems
6,399

 
6,470

Corporate
5,583

 
6,360

Total
$
25,967

 
$
26,686



Total Net Sales by Geographic Areas (in millions)
2013

 
2012

 
2011

United States
$
17,260

 
$
18,182

 
$
18,652

Asia/Pacific
2,590

 
2,510

 
2,556

Middle East and North Africa
2,396

 
2,470

 
2,216

All Other (Principally Europe)
1,460

 
1,252

 
1,367

Total
$
23,706

 
$
24,414

 
$
24,791



The following is a breakdown of net sales to major customers:
(In millions)
2013

 
2012

 
2011

Sales to the U.S. Government(1)
$
17,019

 
$
17,861

 
$
18,360

Sales to the U.S. Department of Defense(1)
16,015

 
16,818

 
17,308

Total international sales(2)
6,446

 
6,232

 
6,139

Foreign military sales through the U.S. Government
3,062

 
3,196

 
2,998

(1)
Excludes foreign military sales through the U.S. Government.
(2)
Includes foreign military sales through the U.S. Government.

Property, Plant and Equipment, net by Geographic Area (in millions)
2013

 
2012

United States
$
1,841

 
$
1,878

All Other (Principally Europe)
96

 
108

Total
$
1,937

 
$
1,986


 

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