Boeing 2015 Annual Report Download - page 40

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24
Research and development expense in 2015 increased by $284 million compared to 2014 primarily due
to higher 777X spending at Commercial Airplanes which more than offset lower spending at BDS. Research
and development expense in 2014 decreased by $24 million compared to 2013. In 2014, Commercial
Airplanes spending increased on 777X, 787-10 and 737 MAX, partially offset by lower spending on the
787-9.
Backlog
Our backlog at December 31 was as follows:
(Dollars in millions) 2015 2014 2013
Contractual Backlog:
Commercial Airplanes $431,408 $440,118 $372,980
Defense, Space & Security:
Boeing Military Aircraft 20,019 21,119 23,580
Network & Space Systems 7,368 8,935 9,832
Global Services & Support 17,800 16,920 16,269
Total Defense, Space & Security 45,187 46,974 49,681
Total contractual backlog $476,595 $487,092 $422,661
Unobligated backlog $12,704 $15,299 $18,267
Contractual backlog of unfilled orders excludes purchase options, announced orders for which definitive
contracts have not been executed, and unobligated U.S. and non-U.S. government contract funding. The
decrease in contractual backlog at December 31, 2015 compared with December 31, 2014 was primarily
due to deliveries in excess of net orders. The increase in contractual backlog at December 31, 2014
compared with December 31, 2013 was primarily due to commercial airplane orders and reclassifications
from unobligated backlog related to incremental funding. The increase was partially offset by commercial
airplane deliveries and revenues recognized on awarded contracts.
Unobligated backlog includes U.S. and non-U.S. government definitive contracts for which funding has
not been authorized. The decreases in unobligated backlog in 2015 and 2014 were primarily due to
reclassifications to contractual backlog related to incremental funding for BDS contracts, partially offset
by contract awards.
Additional Considerations
KC-46A Tanker In 2011, we were awarded a contract from the U.S. Air Force (USAF) to design, develop,
manufacture and deliver four next generation aerial refueling tankers. The KC-46A Tanker is a derivative
of our 767 commercial aircraft. This Engineering, Manufacturing and Development (EMD) contract is a
fixed-price incentive fee contract valued at $4.9 billion and involves highly complex designs and systems
integration. We have also begun work on low rate initial production (LRIP) aircraft for the USAF. The USAF
is expected to authorize two low rate initial production lots in 2016 for a total of 19 aircraft, subject to
satisfactory progress being made on the EMD contract.
In second quarter 2014, we recorded a reach-forward loss of $425 million on the EMD contract. In second
quarter 2015, we recorded an additional reach-forward loss of $835 million. $513 million of this loss was
recorded at our Commercial Airplanes segment and the remaining $322 million was recorded in our BMA
segment. The $835 million loss includes $670 million related to the EMD contract and $165 million related
to LRIP aircraft. The reach-forward loss on the EMD contract was driven primarily by design changes
required in the aircraft fuels and aerial refueling systems which were identified as we prepared for and
conducted ground and flight testing. Other costs include additional qualification and certification testing
as well as investments that will enable us to meet our delivery commitments in 2017. The reach-forward