Research and development (R&D) expenditures involve experimentation, design, development and related test activities for defense systems,
new and derivative jet aircraft including both commercial and military, advanced space and other company-sponsored product development.
These are expensed as incurred including amounts allocable as reimbursable overhead costs on U.S. government contracts.
Boeing's total R&D expenses amounted to $3.3 billion, $3.9 billion, $4.1 billion and $6.5 billion in 2012, 2011, 2010 and 2009, respectively. R&D expenses in 2009 included $2.7 billion of production costs related to the first three flight test 787 aircraft that cannot be sold due to the inordinate amount of rework and unique and extensive modifications that would be made to the aircraft.
Boeing's R&D Expenses by Business Segment:
R&D costs also include bid and proposal efforts related to government products and services, as well as costs incurred in excess of amounts estimated to be recoverable under cost-sharing research and development agreements. Bid and proposal costs were $326 million, $332 million, $355 million and $343 million in 2012, 2011, 2010 and 2009, respectively.
Boeing's research and development expenses decreased by $666 million and $260 million in 2012 and 2011. These decreases were primarily due to lower spending on the 747-8 and 787-8 programs. In 2010, Boeing's Research and development expense decreased by $2,408 million primarily due to the reclassification to research and development expenses of $2,693 million of production costs related to the three 787 flight test airplanes - in 2009, partially offset by a $285 million increase of other research and development expense.
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