Boeing 2009 Annual Report Download - page 43

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Revenues BDS revenues increased by $1,614 million in 2009 compared to 2008, primarily due to
higher revenues in GS&S and BMA, partially offset by decreases in N&SS. BDS revenues were
unchanged in 2008 compared to 2007 as revenue growth in GS&S was offset by decreases in BMA
and N&SS.
Operating Earnings BDS operating earnings in 2009 increased by $67 million compared with 2008
primarily due to higher earnings in the BMA segment, partially offset by lower earnings in the N&SS
segment. BDS earnings decreased by $208 million in 2008 compared with 2007 primarily due to lower
earnings in the BMA segment resulting from a $248 million charge taken on the AEW&C program in
the second quarter partially offset by higher earnings in the N&SS segment.
Backlog Total backlog is comprised of contractual backlog, which represents work we are on contract
to perform for which we have received funding, and unobligated backlog, which represents work we
are on contract to perform for which funding has not yet been authorized and appropriated. BDS total
backlog decreased 11% in 2009, from $73,004 million to $64,839 million, partly due to a partial
termination for convenience from the U.S. Army of the BCTM (formerly FCS) System Development and
Demonstration contract relating to Manned Ground Vehicles and associated systems and equipment.
Current year deliveries and sales on multi-year contracts awarded in prior years also contributed to the
backlog reduction.
For further details on the changes between periods, refer to the discussions of the individual segments
below.
Additional Considerations
Our business includes a variety of development programs which have complex design and technical
challenges. Many of these programs have cost-type contracting arrangements. In these cases the
associated financial risks are primarily in lower profit rates or program cancellation if milestones and
technical progress are not accomplished. Examples of these programs include Airborne Laser,
EA-18G, Family of Beyond Line-of-Sight Terminals (FAB-T), BCTM (formerly FCS), GMD, Joint
Tactical Radio System (JTRS), P-8A and Proprietary programs.
Some of our development programs are contracted on a fixed-price basis. Many of these programs
have highly complex designs. As technical or quality issues arise, we may experience schedule delays
and cost impacts, which could increase our estimated cost to perform the work or reduce our estimated
price, either of which could result in a material charge. These programs are ongoing, and while we
believe the cost and fee estimates incorporated in the financial statements are appropriate, the
technical complexity of these programs creates financial risk as additional completion costs may
become necessary or scheduled delivery dates could be extended, which could trigger termination
provisions, the loss of satellite in-orbit incentive payments, or other financially significant exposure.
These programs have risk for reach-forward losses if our estimated costs exceed our estimated
contract revenues. Examples of these programs include AEW&C, International KC-767 Tanker,
commercial and military satellites, Vigilare and High Frequency Modernisation.
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