Boeing 2008 Annual Report Download - page 37

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Other Earnings Items
(Dollars in millions)
Years ended December 31, 2008 2007 2006
Earnings from operations $ 3,950 $ 5,830 $3,014
Other income, net 247 484 420
Interest and debt expense (202) (196) (240)
Earnings before income taxes 3,995 6,118 3,194
Income tax expense (1,341) (2,060) (988)
Net earnings from continuing operations $ 2,654 $ 4,058 $2,206
Other income, which primarily consists of interest income, was lower in 2008 compared with 2007 as a
result of lower interest rates and lower investment balances. Other income was higher in 2007
compared with 2006 as a result of increases in average principal balances and higher average rates of
return on cash and investments. Interest and debt expense remained flat in 2008 but decreased in
2007 compared with 2006, primarily due to debt repayments.
The effective income tax rates were 33.6% and 33.7% for 2008 and 2007. The effective income tax
rate of 33.7% for 2007 differed from the 2006 effective income tax rate of 30.9% primarily due to
Foreign Sales Corporation and Extraterritorial Income exclusion tax benefits that existed in 2006, but
did not recur in 2007. This was partially offset by the non-deduction in 2006 of the global settlement
with the U.S. DoJ and other income tax provision adjustments. For additional discussion related to
Income Taxes see Note 4.
Backlog
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. Contractual backlog increased by $26,896 million in 2008 compared to 2007 primarily as a
result of increases at Commercial Airplanes of $23,399 million, which were due to new orders in
excess of deliveries for our 737NG, 767, 777 and 787 programs. IDS contractual backlog increased by
$3,497 million in 2008 compared to 2007 primarily due to international orders for F-15 and C-17
aircraft.
Unobligated backlog includes U.S. and non-U.S. government definitive contracts for which funding has
not been authorized. The decrease in total Unobligated backlog during 2008 is primarily due to
decreases at IDS of $2,174 million compared with 2007 primarily due to funding of existing multi-year
contracts including the F/A-18, Future Combat Systems (FCS), and F-22 programs. These decreases
were partially offset by multi-year procurement contracts awarded on the V-22 and Chinook programs.
The decrease in total Unobligated backlog during 2007 is primarily due to decreases at IDS of $3,492
million compared with 2006 primarily due to funding of existing multi-year contracts on FCS,
Proprietary, C-17, P-8A and F/A-18, partially offset by increases in the F-22 program and several
GS&S programs.
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