Boeing 2010 Annual Report Download - page 43

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Operating Results
(Dollars in millions)
Years ended December 31, 2010 2009 2008
Revenues $31,943 $33,661 $32,047
% of Total company revenues 50% 49% 53%
Earnings from operations $ 2,875 $ 3,299 $ 3,232
Operating margins 9.0% 9.8% 10.1%
Research and development $ 1,136 $ 1,101 $ 933
Contractual backlog $48,364 $46,024 $45,285
Unobligated backlog $16,822 $18,815 $27,719
Since our operating cycle is long-term and involves many different types of development and
production contracts with varying delivery and milestone schedules, the operating results of a particular
year, or year-to-year comparisons of revenues and earnings, may not be indicative of future operating
results. In addition, depending on the customer and their funding sources, our orders might be
structured as annual follow-on contracts, or as one large multi-year order or long-term award. As a
result, period-to-period comparisons of backlog are not necessarily indicative of future workloads. The
following discussions of comparative results among periods should be viewed in this context.
Revenues BDS revenues decreased by $1,718 million in 2010 compared with 2009, due to lower
revenues in all three segments, with the largest decrease in the N&SS segment. BDS revenues
increased by $1,614 million in 2009 compared with 2008, due to higher revenues in GS&S and BMA,
partially offset by decreases in N&SS.
Operating Earnings BDS operating earnings in 2010 decreased by $424 million compared with 2009
primarily due to lower margins in the BMA segment and lower revenues in the N&SS segment. 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.
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 increased by less than 1% in 2010, from $64,839 million to $65,186 million, primarily due to
multi-year procurement contract awards on the F/A-18 and International Space Station programs, two
commercial satellite contract awards, and the UK Future Logistics Information Services (FLIS) contract
award, offset by current year deliveries and sales on multi-year contracts awarded in prior years. 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 Family of Beyond
Line-of-Sight Terminals, BCTM, GMD, Joint Tactical Radio System, P-8A Poseidon 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
31