Boeing 2012 Annual Report Download - page 44

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32
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 19% in 2012, from $60,041 million to $71,475 million, primarily due to F-15 and C-17 orders and the
contract award for the Space Launch System program received in 2012. For further details on the changes
between periods, refer to the discussions of the individual segments below.
Additional Considerations
Our BDS 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 reduced fees, lower profit rates or program cancellation if cost,
schedule or technical performance issues arise. Examples of these programs include Ground-based
Midcourse Defense (GMD), Proprietary and Space Launch Systems 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 during development, 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 or otherwise adversely affect our
financial condition. 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 significant fixed-price development programs
include Airborne Early Warning and Control (AEW&C), Family of Advanced Beyond Line-of-Sight Terminals
(FAB-T), India P-8I, Saudi F-15, USAF KC-46A Tanker, and commercial and military satellites.
Boeing Military Aircraft
Operating Results
(Dollars in millions)
Years ended December 31, 2012 2011 2010
Revenues $16,384 $14,947 $14,238
% of total company revenues 20% 22% 22%
Earnings from operations $1,581 $1,526 $1,250
Operating margins 9.6% 10.2% 8.8%
Contractual backlog $29,674 $24,085 $25,094
Unobligated backlog $9,286 $7,155 $8,297
Revenues
BMA revenues increased by 10% in 2012 compared with 2011. The increase of $1,437 million in 2012
was primarily due to higher deliveries on the P-8A and Apache programs of $1,050 million and higher
milestone revenue of $426 million on the KC-46A Tanker program. In addition, F-15 program revenues
were $450 million higher reflecting initial revenues on the contract for the Kingdom of Saudi Arabia partially
offset by lower F-15 deliveries. These increases were partially offset by decreases of $723 million related
to fewer deliveries of C-17 aircraft in 2012 and the conclusion of the KC-767 International Tanker program
in 2011.