Boeing 2008 Annual Report Download - page 36
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The most significant items included in Unallocated items and eliminations are shown in the following
table:
(Dollars in millions)
Years ended December 31, 2008 2007 2006
Pension and other postretirement $(287) $ (686) $ (472)
Share-based plans (149) (233) (680)
Deferred compensation benefit/(expense) 223 (51) (211)
Other unallocated items and eliminations (110) (127) (294)
Total $(323) $(1,097) $(1,657)
We recorded net periodic benefit cost related to pensions and other postretirement benefits of $1,132
million, $1,773 million and $1,663 million in 2008, 2007 and 2006, respectively. Not all net periodic
benefit cost is recognized in earnings in the period incurred because it is allocated to production as
product costs and a portion remains in inventory at the end of the reporting period. Accordingly,
earnings from operations included $1,203 million, $1,730 million and $1,227 million in 2008, 2007 and
2006, respectively. A portion of pension and other postretirement expense is recorded in the business
segments and the remainder is included in unallocated pension and other postretirement expense.
Unallocated pension and other postretirement expense represents the difference between costs
recognized under Generally accepted accounting principles in the United States of America (GAAP) in
the consolidated financial statements and federal cost accounting standards required to be utilized by
our business segments for U.S. government contracting purposes.
Pension and other postretirement expense decreased during 2008 when compared with 2007 primarily
due to a decrease in overall pension costs compared to the same period in the prior year. Pension and
other postretirement expense increased during 2007 when compared with 2006 primarily due to
increased overall pension costs recognized in inventory as of December 31, 2006, which were
subsequently expensed in cost of sales in 2007.
The reduction in Share-based plans expense is primarily due to the expiration of certain Performance
Shares during 2008 and higher expense acceleration during 2007, resulting from six payouts
compared with zero payouts in 2008. The reduction in Share-based plans expense during 2007 is
primarily due to lower Performance Shares outstanding in 2007 and higher expense acceleration
during 2006, resulting from 12 payouts compared with six payouts in 2007. The year over year
changes in deferred compensation expense are primarily driven by changes in our stock price and
broad stock market conditions.
Other unallocated items and expense includes a charge related to satellite litigation of $100 million,
offset by lower performance-based compensation in 2008. Other unallocated items and expense in
2007 decreased as a result of reduced intercompany profit elimination as a result of fewer
intercompany deliveries than the previous year.
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