Boeing 2009 Annual Report Download - page 46

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Network & Space Systems
Operating Results
(Dollars in millions)
Years ended December 31, 2009 2008 2007
Revenues $10,877 $11,346 $11,481
% of Total company revenues 16% 19% 17%
Earnings from operations $ 839 $ 1,034 $ 863
Operating margins 7.7% 9.1% 7.5%
Research and development $ 397 $ 298 $ 289
Contractual backlog $ 7,746 $ 8,868 $ 9,207
Unobligated backlog $ 9,187 $16,981 $20,134
Revenues N&SS revenues decreased 4% in 2009 and 1% in 2008. N&SS revenues are expected to
decrease in 2010, primarily due to lower revenues on the BCTM and GMD programs. The decrease of
$469 million in 2009 is primarily due to lower volume on the GMD, Intelligence and Security Systems,
and Proprietary programs, partly offset by higher volume on several satellite programs. The decrease
of $135 million in 2008 is primarily due to decreased revenues in BCTM (formerly FCS), Proprietary
and satellite programs partially offset by increased revenues in the SBInet program.
Delta launch and new-build satellite deliveries were as follows:
Years ended December 31, 2009 2008 2007
Delta II Commercial 123
Delta IV Commercial 1
Satellites 614
Operating Earnings N&SS operating earnings decreased by $195 million in 2009 primarily due to
lower revenues and charges related to the Sea Launch bankruptcy. Earnings in 2009 were also
reduced by charges related to the settlement of a satellite contract dispute and indemnification of Delta
II inventory. Earnings in 2008 included a favorable settlement on a civil satellite program. N&SS
earnings increased by $171 million in 2008 primarily due to increased earnings from our investment in
United Launch Alliance (ULA). N&SS operating earnings include equity earnings of $164 million, $178
million and $74 million from the United Space Alliance joint venture and the ULA joint venture in 2009,
2008, and 2007, respectively.
Research and Development The N&SS research and development funding remains focused on the
development of communications, command and control, computers, intelligence, surveillance and
reconnaissance systems (C4ISR); that support a network-enabled architecture approach for our
customers. We are investing in capabilities to enhance connectivity between existing and new air/
ground and maritime platforms, to increase communications availability, utility and bandwidth through
more robust space systems, and to leverage innovative networking and ISR concepts. Key programs in
this area include BCTM, JTRS, Wideband Global Satellite System Ares, FAB-T and SBInet.
Investments were also made to develop concepts and capabilities related to cyber and security
products, as well as the development of next-generation space and intelligence systems. Along with
increased funding to support these network-enabled capabilities, we also maintained our investment
levels in missile defense, directed energy and advanced exploration systems.
Backlog N&SS total backlog decreased by 34% in 2009 compared with 2008 partly due to the partial
termination for convenience from the U.S. Army of the BCTM (formerly FCS) System Development and
Demonstration contract related to Manned Ground Vehicles and associated systems and equipment.
Current year deliveries and sales on multi-year contracts awarded in prior years including BCTM,
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