Boeing 2009 Annual Report Download - page 31

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earnings decreased $72 million reflecting lower revenues and a provision for losses partially offset by
lower interest expense. Unallocated items and eliminations in 2008 improved by $774 million
compared with 2007, which is further explained in the table below.
The most significant items included in Unallocated items and eliminations are shown in the following
table:
(Dollars in millions)
Years ended December 31, 2009 2008 2007
Share-based plans expense $(189) $(149) $ (233)
Deferred compensation expense/(income) (158) 223 (51)
Other unallocated items and eliminations (264) (110) (127)
Pension 110 (208) (561)
Postretirement (93) (79) (125)
Total $(594) $(323) $(1,097)
The reduction in Share-based plans expense in 2008 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.
Deferred compensation expense increased by $381 million in 2009 and decreased by $274 million in
2008. 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 eliminations expense increased by $154 million in 2009 primarily due to
timing of intercompany expense allocations, elimination of profit on intercompany items and a more
favorable insurance adjustment in the same periods of the prior year. Other unallocated items and
expense in 2008 includes a charge related to satellite litigation of $100 million, offset by lower
performance-based compensation in 2008.
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. We recorded net periodic benefit
cost related to pensions and other postretirement benefits of $1,816 million, $1,132 million and $1,773
million in 2009, 2008 and 2007, 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. 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. Earnings from operations included the following amounts allocated to
business segments and Other unallocated items and eliminations.
(Dollars in millions) Pension
Other Postretirement
Benefits
Years ended December 31, 2009 2008 2007 2009 2008 2007
Allocated to business segments $(989) $(488) $ (521) $(522) (428) (523)
Other unallocated items and eliminations 110 (208) (561) (93) (79) (125)
Total $(879) $(696) $(1,082) $(615) (507) (648)
19