Boeing 2011 Annual Report Download - page 38

contractual remedies that may be implicated by program delays. We continue to address customer
claims and requests for other contractual relief as they arise. However, once orders are included in firm
backlog, orders remain in backlog until canceled or fulfilled, although the value of orders is adjusted as
changes to price and schedule are agreed to with customers.
The increase in contractual backlog during 2011 and 2010 was due to orders in excess of deliveries
and changes in projected revenue escalation, partially reduced by cancellations of orders. The
increase in unobligated backlog in 2011 represents Commercial Airplanes’ share of the USAF contract
for the KC-46A Tanker.
Accounting Quantity The accounting quantity is our estimate of the quantity of airplanes that will be
produced for delivery under existing and anticipated contracts. The determination of the accounting
quantity is limited by the ability to make reasonably dependable estimates of the revenue and cost of
existing and anticipated contracts. It is a key determinant of the gross margins we recognize on sales
of individual airplanes throughout a program’s life. Estimation of each program’s accounting quantity
takes into account several factors that are indicative of the demand for that program, including firm
orders, letters of intent from prospective customers and market studies. We review our program
accounting quantities quarterly.
The accounting quantity for each program may include units that have been delivered, undelivered
units under contract, and units anticipated to be under contract in the reasonable future (anticipated
orders). In developing total program estimates, all of these items within the accounting quantity must
be considered.
The table below provides details of the accounting quantities and firm orders by program as of
December 31. Cumulative firm orders represent the cumulative number of commercial jet airplane
deliveries plus undelivered firm orders.
Program
737 747 767 777 787
2011
Program accounting quantities 6,200 1,549 1,084 1,350 1,100
Undelivered units under firm orders 2,365 97 72 380 857
Cumulative firm orders 6,243 1,524 1,086 1,363 860
2010
Program accounting quantities 5,000 1,524 1,048 1,150 *
Undelivered units under firm orders 2,186 107 50 253 847
Cumulative firm orders 5,692 1,525 1,044 1,163 847
2009
Program accounting quantities 4,600 1,499 1,035 1,100 *
Undelivered units under firm orders 2,076 108 59 281 851
Cumulative firm orders 5,206 1,526 1,041 1,117 851
* The initial accounting quantity for the 787 program was established in the third quarter of 2011.
737 Program The accounting quantity for the 737 program increased by 1,200 units in 2011 due to the
program’s normal progress of obtaining additional orders and delivering airplanes. During 2010, we
announced plans to increase monthly production from 31.5 to 35 airplanes per month beginning in
2012 and a further increase to 38 airplanes per month beginning in 2013. On June 15, 2011, to
address continued demand for delivery positions, we announced plans to increase production of the
737 to 42 airplanes per month beginning in 2014. On August 30, 2011, we announced the launch of
the 737 MAX, the new engine variant of the 737. First delivery of the 737 MAX is expected in 2017.
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