Boeing 2011 Annual Report Download - page 43

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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 by 8% in 2011, from $65,186 million to $60,041 million, primarily due to funding of
existing multi-year contracts and termination for convenience by the U.S. Army of the BCTM program,
partially offset by new orders. 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, 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 our fixed-price development programs include Airborne Early
Warning and Control (AEW&C), India P-8I, USAF KC-46A Tanker and commercial and military
satellites.
Boeing Military Aircraft
Operating Results
(Dollars in millions)
Years ended December 31, 2011 2010 2009
Revenues $14,947 $14,238 $14,304
% of Total company revenues 22% 22% 21%
Earnings from operations $ 1,526 $ 1,250 $ 1,527
Operating margins 10.2% 8.8% 10.7%
Research and development $ 541 $ 589 $ 582
Contractual backlog $24,085 $25,094 $26,354
Unobligated backlog $ 7,155 $ 8,297 $ 9,297
Revenues
BMA revenues increased by 5% in 2011. The increase of $709 million in 2011 was primarily due to
higher AEW&C, C-17 and KC-767 International Tanker revenues. AEW&C revenues increased by
$780 million in 2011 due to delivery of the first two Peace Eye aircraft and higher Wedgetail milestone
revenues. C-17 revenues increased by $273 million reflecting favorable mix, partially offset by fewer
deliveries. International Tanker revenues increased by $235 million due to higher deliveries. In
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