Boeing 2009 Annual Report Download - page 22

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reconsidered throughout the life of our programs. Changes in underlying assumptions, supplier
performance, circumstances or estimates concerning the selection of the accounting quantity or
changes in market conditions, along with a failure to realize predicted costs, may adversely affect
future financial performance.
Because of the significance of the judgments and estimation processes described above, it is likely that
materially different sales and profit amounts could be recorded if we used different assumptions or if
the underlying circumstances were to change. Changes in underlying assumptions, circumstances or
estimates may adversely affect future period financial performance. For additional information on our
accounting policies for recognizing sales and profits, see our discussion under “Management’s
Discussion and Analysis—Critical Accounting Policies—Contract Accounting/Program Accounting” on
pages 43-45 and Note 1 to the Consolidated Financial Statements on pages 56-57 of this Form 10-K.
Significant changes in discount rates, actual investment return on pension assets and other
factors could affect our earnings, equity, and pension contributions in future periods.
Our earnings may be positively or negatively impacted by the amount of income or expense we record
for our pension and other postretirement benefit plans. Generally accepted accounting principles in the
United States of America (GAAP) require that we calculate income or expense for the plans using
actuarial valuations. These valuations reflect assumptions relating to financial market and other
economic conditions. Changes in key economic indicators can change the assumptions. The most
significant year-end assumptions used to estimate pension or other postretirement income or expense
for the following year are the discount rate, the expected long-term rate of return on plan assets and
expected future medical inflation. In addition, we are required to make an annual measurement of plan
assets and liabilities, which may result in a significant change to equity through a reduction or increase
to Other comprehensive income. For a discussion regarding how our financial statements can be
affected by pension and other postretirement plan accounting policies, see “Management’s Discussion
and Analysis—Critical Accounting Policies—Postretirement Plans” on pages 46-47 of this Form 10-K.
Although GAAP expense and pension or other postretirement contributions are not directly related, the
key economic factors that affect GAAP expense would also likely affect the amount of cash or common
stock we would contribute to the pension or other postretirement plans. Potential pension contributions
include both mandatory amounts required under federal law Employee Retirement Income Security Act
(ERISA) and discretionary contributions to improve the plans’ funded status.
Some of our and our suppliers’ workforces are represented by labor unions, which may lead to
work stoppages.
Approximately 57,000 employees, which constitute approximately 36% of our total workforce, are union
represented as of December 31, 2009. We experienced a work stoppage in 2008 when a labor strike
halted commercial aircraft and certain BMA program production and we may experience additional
work stoppages in the future, which could adversely affect our business. We cannot predict how stable
our relationships, currently with 14 different U.S. labor organizations and 7 different non-U.S. labor
organizations, will be or whether we will be able to meet the unions’ requirements without impacting
our financial condition. The unions may also limit our flexibility in dealing with our workforce. Union
actions at suppliers can also affect us. Work stoppages and instability in our union relationships could
delay the production and/or development of our products, which could strain relationships with
customers and cause a loss of revenues which would adversely affect our operations.
Competition within our markets may reduce our procurement of future contracts and sales.
The markets in which we operate are highly competitive. Our competitors may have more extensive or
more specialized engineering, manufacturing and marketing capabilities than we do in some areas. In
addition, some of our largest customers could develop the capability to manufacture products or
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