Boeing 2011 Annual Report Download - page 45

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contract awards for the KC-46A and low-rate initial production of the P-8A. Total backlog in 2010
decreased 6% from 2009, primarily due to deliveries and sales on multi-year contracts awarded in prior
years partially offset by a multi-year contract award on the F/A-18 program.
Additional Considerations
AEW&C
The AEW&C development program, also known as Wedgetail in Australia, Peace Eagle in Turkey and
Peace Eye in the Republic of Korea, consists of 737-700 aircraft outfitted with a variety of command
and control and advanced radar systems, some of which have never been installed on an airplane
before. A total of five Wedgetail aircraft have been delivered to Australia with initial customer
acceptance. Four were delivered in 2010 and one in September 2011. The final Wedgetail aircraft is
scheduled for delivery with initial customer acceptance in the first quarter of 2012. Final customer
acceptance for all six Wedgetail aircraft is also scheduled to be completed during the first half of 2012.
In January 2011, the Peace Eagle program began the formal test phase which is scheduled to
conclude in the second half of 2012. The first Peace Eye aircraft was delivered to the Republic of
Korea in September 2011 and the second in December 2011. During 2011, 2010 and 2009, we
recorded charges increasing the reach-forward losses on the AEW&C programs in Australia and
Turkey by $60 million, $174 million and $133 million, respectively. These are advanced and complex
fixed-price development programs involving technical challenges at the individual subsystem level and
in the overall integration of these subsystems into a reliable and effective operational capability. We
believe that the cost and revenue estimates incorporated in the financial statements are appropriate;
however, the technical complexity of the programs creates financial risk as additional completion costs
may be necessary or scheduled delivery dates could be delayed, either of which could result in lower
margins or additional material charges.
C-17
See the discussion of the C-17 program in Note 12 to our Consolidated Financial Statements.
Network & Space Systems
Operating Results
(Dollars in millions)
Years ended December 31, 2011 2010 2009
Revenues $8,673 $9,455 $10,877
% of Total company revenues 13% 15% 16%
Earnings from operations $ 690 $ 711 $ 839
Operating margins 8.0% 7.5% 7.7%
Research and development $ 476 $ 417 $ 397
Contractual backlog $9,056 $9,586 $ 7,746
Unobligated backlog $6,424 $8,435 $ 9,187
Revenues
N&SS revenues decreased 8% in 2011 and 13% in 2010. The decrease of $782 million in 2011 is
primarily due to $577 million of lower revenues on the BCTM program which was terminated for
convenience during 2011. Lower revenues on the Ground-based Midcourse Defense (GMD), SBInet
and Joint Tactical Radio System programs reduced revenues by $150 million, $146 million and $93
million respectively, partially offset by $150 million of higher sales of Delta inventory to United Launch
Alliance (ULA) and $250 million of higher commercial and civil satellite revenues. The decrease of
$1,422 million in 2010 is primarily due to lower volume on the BCTM and GMD programs.
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