Boeing 2005 Annual Report Download - page 85

Notes to Consolidated Financial Statements
Net earnings
Year ended December 31, 2005 2004 2003
Commercial Airplanes $1,432 $ 753 $(1,707
Integrated Defense Systems:
Aircraft and Weapon Systems 1,707 1,636 1,420
Network Systems 638 969 645
Support Systems 765 662 455
Launch and Orbital Systems 780 (342) (1,754)
Total Integrated Defense Systems 3,890 2,925 766
Boeing Capital Corporation 232 183 91
Other (334) (535) (379)
Accounting differences/eliminations (989) (403) (11)
Share-based plans expense (852) (576) (456)
Unallocated expense (567) (340) (320)
Earnings from continuing operations 2,812 2,007 398
Other income, net 301 288 460
Interest and debt expense (294) (335) (358)
Earnings before income taxes
Income tax (expense)/benefit
Net earnings from continuing
operations
Income from discontinued
operations, net of taxes
Net (loss)/gain on disposal of
discontinued operations,
net of taxes
Cumulative effect of accounting
change, net of taxes
Net earnings
2,819
(257)
$2,562
(7)
17
$2,572
1,960
(140)
$1,820
10
42
$1,872
500
185
$(1,685
33
$(1,718
Depreciation and amortization
Year ended December 31, 2005 2004 2003
Commercial Airplanes $ 396 $ 460 $ 455
Integrated Defense Systems:
Aircraft and Weapon Systems 136 118 114
Network Systems 106 97 94
Support Systems 25 16 15
Launch and Orbital Systems 201 214 207
Total Integrated Defense Systems 468 445 430
Boeing Capital Corporation 257 226 217
Other 40 51 49
Unallocated 365 342 267
$1,526 $1,524 $1,418
Research and development expense
Year ended December 31, 2005 2004 2003
Commercial Airplanes $1,302 $ 941 $ 676
Integrated Defense Systems:
Aircraft and Weapon Systems 374 382 360
Network Systems 285 234 195
Support Systems 80 57 59
Launch and Orbital Systems 116 161 232
Total Integrated Defense Systems 855 834 846
Other 48 104 129
Total research and development
expense $2,205 $1,879 $1,651
For segment reporting purposes, we record Commercial
Airplanes segment revenues and cost of sales for airplanes
transferred to other segments. Such transfers may include air-
planes accounted for as operating leases and considered
transferred to the BCC segment and airplanes transferred to
the IDS segment for further modification prior to delivery to the
customer. The revenues and cost of sales for these transfers
are eliminated in the Accounting differences/eliminations cap-
tion. In the event an airplane accounted for as an operating
lease is subsequently sold, the ‘Accounting differences/elimina-
tions’ caption would reflect the recognition of revenue and cost
of sales on the consolidated financial statements.
For segment reporting purposes, we record IDS revenues and
cost of sales for only the modification performed on airplanes
received from Commercial Airplanes when the airplane is deliv-
ered to the customer or at the attainment of performance mile-
stones. The ‘Accounting differences/eliminations’ caption would
reflect the recognition of revenues and cost of sales for the pre-
modified airplane upon delivery to the customer or at the
attainment of performance milestones.
The Accounting differences/eliminations caption of net earnings
includes the impact of cost measurement differences between
GAAP and federal cost accounting standards. The table below
summarizes the Accounting differences/eliminations line in net
earnings.
Accounting differences/eliminations
Year ended December 31, 2005 2004 2003
Pension $(846) $(427 $(463
Post-retirement (5) (285) (257)
Capitalized interest (47) (48) (53)
Pre-modification aircraft elimination (10) 15 (128)
Other (81) (112) (36)
Total $(989) $(403) $4(11)
Unallocated expense includes the recognition of an expense or
a reduction to expense for deferred stock compensation plans
resulting from stock price changes as described in Note 16.
The cost attributable to share-based plans expense is not allo-
cated to other business segments except for the portion
related to BCC. Unallocated expense also includes corporate
costs not allocated to the operating segments. Unallocated
depreciation and amortization relates primarily to our Shared
Services Group.
Unallocated assets primarily consist of cash and investments,
prepaid pension expense, net deferred tax assets, capitalized
interest and assets held by our Shared Services Group as well
as intercompany eliminations. Unallocated liabilities include vari-
ous accrued employee compensation and benefit liabilities,
including accrued retiree health care, net deferred tax liabilities
and income taxes payable. Debentures and notes payable are
not allocated to other business segments except for the por-
tion related to BCC. Unallocated capital expenditures relate pri-
marily to Shared Services Group assets and segment assets
managed by Shared Services Group, primarily IDS.
The Boeing Company and Subsidiaries 83