Boeing 2012 Annual Report Download - page 48

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36
Operating Earnings
GS&S operating earnings increased by 6% in 2012 primarily due to improved performance on several
MM&U programs and higher revenues on several IL programs. Net favorable cumulative contract catch-
up adjustments were $67 million higher in 2012 than in 2011.
Operating earnings increased by 4% in 2011 primarily due to higher earnings on several IL programs,
partially offset by lower earnings on MM&U programs.
Backlog
GS&S total backlog increased by 19% in 2012 compared with 2011 primarily due to the award of F-15
support contracts. Total backlog decreased by 3% in 2011 compared with 2010 primarily due to revenues
recognized on multi-year contracts awarded in prior years on several IL programs, partially offset by a
TSGS contract award on the P-8A program.
Boeing Capital
Business Environment and Trends
BCC’s customer financing and investment portfolio at December 31, 2012 totaled $4,066 million. A
substantial portion of BCC’s portfolio is concentrated among certain U.S. commercial airline customers.
BCC’s portfolio is also concentrated by varying degrees across Boeing aircraft product types most notably
out-of-production Boeing aircraft such as 717 aircraft.
BCC provided customer financing of $364 million and $239 million during 2012 and 2011. While we may
be required to fund a number of new aircraft deliveries in 2013, we expect financing will be available at
reasonable prices from broad and globally diverse sources.
Aircraft values and lease rates are impacted by the number and type of aircraft that are currently out of
service. Approximately 2,200 western-built commercial jet aircraft (10% of current world fleet) were parked
at the end of 2012, including both in-production and out-of-production aircraft types. Of these parked
aircraft, approximately 25% are not expected to return to service. At the end of 2011 and 2010, 9.4% and
10.5% of the western-built commercial jet aircraft were parked. Aircraft valuations could decline if significant
numbers of additional aircraft, particularly types with relatively few operators, are placed out of service.
Summary Financial Information
(Dollars in millions)
Years ended December 31, 2012 2011 2010
Revenues $441 $520 $639
Earnings from operations $82 $113 $152
Operating margins 19% 22% 24%
Revenues
BCC segment revenues consist principally of lease income from equipment under operating lease and
interest from financing receivables and notes. BCC’s revenues decreased $79 million in 2012 compared
with 2011 primarily due to lower operating and finance lease income. Operating lease income decreased
as a result of the return of aircraft and lower lease rates on re-leased aircraft. In addition, lower finance
lease income reflects the revised contractual terms of BCC’s leases with AirTran Airways Inc.(Airtran), a