Boeing Delivery Schedule

Year
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000

707
8
77
91
80
68
34
38
61
83
118
111
59
19
10
4
11
21
7
9
8
13
6
3
2
8
8
8
3
4
9

717

727

6
95
111
135
155
160
114
55
33
41
92
91
91
61
67
118
136
131
94
26
11
8

5
4
14
5
1

12
32

737

747

757

767

777

4
105
114
37
29
22
23
55
51
41
25
40
77
92
108
95
82
67
115
141
161
165
146
174
215
218
152
121
89
76
135
281
320
281

4
92
69
30
30
22
21
27
20
32
67
73
53
26
22
16
24
35
23
24
45
70
64
61
56
40
25
26
39
53
47
25

2
25
18
36
35
40
48
51
77
80
99
71
69
43
42
46
54
67
45

20
55
29
25
27
37
53
37
60
62
63
51
41
37
43
42
47
44
44

13
32
59
74
83
55

2001
2002
2003
1010

707

49
20
8
121

717

1831

727

299
223
104
4483

737

31
27
14
1333
Total:
19822001

45
29
12
1034

40
35
21
913

993

857

747

757

767

61
47
25
449

777

DC-8
21
91
42
22
19
20
31
32
41
102
85
33
13
4

DC-9

5
69
153
202
122
51
46
32
29
48
42
50
22
22
39
18
16
10

DC-10

13
52
57
47
43
19
14
18
35
41
25
11
12
10
11
17
10
10
1

Total
Deliveri
MD-11 MD-80 MD-90
es
8
98
182
122
90
59
153
208
319
471
680
498
287
213
185
242
284
255
207
156
243
360
5
363
61
359
34
232
51
266
44
200
71
285
85
344
94
374
120
420
117
402
3
139
527
31
140
606
42
84
572
36
43
409
17
23
312
18
18
13
256
15
12
25
271
12
16
26
375
12
8
34
563
8
26
13
620
4
5
491

556

976

446

200

1191

116

527
381
184
14659

This spreadsheet supports STUDENT analysis of the case,

"The Boeing 7E7" (Case 16).
Please note that this is a working model. Assumptions can be
changed to vary the results.

Copyright 2004 by the Trustees of the University of Virginia Darden School Foundation.

Exhibit 1
Revenues, Operating Profits and Identifiable Assets
by Segment for the Boeing Company
2002

2001

2000

Revenues
Commercial airplanes
Integrated defense systems
Accounting eliminations and other
Total

28,387
24,957
725
54,069

35,056
22,815
1,047
58,918

31,171
19,963
187
51,321

Operating Profit
Commercial airplanes
Integrated defense systems
Accounting eliminations and other
Total

2,847 $
2,009
(988)
3,868 $

2,632 $
2,965
(1,701)
3,896 $

2,736
1,002
(680)
3,058

Identifiable Assets
Commercial airplanes
Integrated defense systems
Accounting eliminations and other
Total

9,726
12,753
29,863
52,342

10,851
12,461
25,666
48,978

10,367
12,579
20,588
43,534

Exhibit 2
Boeing Balance Sheets
($ in millions)
2002
Assets
Cash and cash equivalents
Accounts receivable
Inventories, net of advances, progress billing and reserves
Other current assets
Total current assets
Customer and commercial financing - net
Property, plant and equipment - net
Goodwill and other acquired intangibles - net
Prepaid pension expense
Deferred income taxes and other assets
Total assets

2001

$ 2,333
5,007
6,184
3,331
16,855
10,922
8,765
3,888
6,671
5,241
$ 52,342

633
5,156
7,559
3,497
16,845
9,345
8,459
6,447
5,838
2,044
$ 48,978

$ 13,739
1,814
4,257
19,810
11,705
12,589
542

$ 14,237
1,399
4,930
20,566
5,922
10,866
799

Liabilities and Shareholders' equity

Accounts payable
Short-term debt and current portion of long-term debt
Other current liabilities
Total current liabilities
Accrued retiree health-care and pension-plan liability
Long-term debt
Other liabilities
Shareholders' equity:
Common shares
Retained earnings
Treasury sales
Total shareholders' equity
Total liabilities and shareholders' equity

1,831
14,262
(8,397)
7,696
$ 52,342 $

4,994
14,340
(8,509)
10,825
48,978

Exhibit 3
Boeing Income Statements
($ in millions; except per-share data)

Sales and other operating expenses

Cost of products and services
General and administrative expense
Research and development expense
Impact of September 11, 2001 charges/(recoveries)
Other operating expenses
Earnings from operations
Other income/(expense)
Interest and debt expense
Earnings before income taxes
Income taxes1
Net earnings before cumulative effect of accounting change
Cumulative effect of accounting change, net of tax
Net earnings

2002
2001
$ 54,069 $ 58,198
45,499
48,778
2,534
2,389
1,639
1,936
(2)
935
531
264
3,868
3,896
42
318
(730)
(650)
3,180
3,564
861
738
2,319
2,826
(1,827)
1
$
492 $ 2,827

Earnings per share

0.62

3.46

Boeing's average tax rate consistent with reported financial performance for 2002
was 27%. Yet Boeing's marginal effective tax rate was 35%.

EXHIBIT 8 Forecast of Boeing 7E7 Free Cash Flows ($ in millions)

Assumptions
Initial price of 7E7
Initial price of 7E7 Stretch
Cost of goods sold (% of sales)
Working-capital requirement (WCR) as a % of sales
General, selling, and administrative (GS&A) as a % of sales

$136.95
$170.87
80%
6.7%
8%

Development costs (2004-2009)

Total number of planes yrs 1-20
Total number of planes yrs 20-30
Inflation
Marginal effective tax rate
% Deliveries
Project year
Delivery year
Revenues
Cumulative planes delivered
Total number of planes delivered
7E7 planes
7E7 Stretch planes
7E7 Price
7E7 Stretch price
Total product revenues
Cost of goods sold
Gross Profit
Depreciation
GS&A expense
Operating Profit (before R&D)
R&D expense
Pre-tax profit
Taxes (or tax credit)
After-tax profit
Capital expenditure
Depreciation add-back
Change in WCR
Annual free cash flow

$8,000.00
2500
Same as year 20
2%
35%

2004

2005

2006

2007

0.00
0.00
300.00
(300.00)
(105.00)
(195.00)
100.00
0.00

0.00

0.00

0.00

0.00
900.00
(900.00)
(315.00)
(585.00)
300.00
0.00

0.00
3,000.00
(3,000.00)
(1,050.00)
(1,950.00)
1,000.00
0.00

0.00
900.00
(900.00)
(315.00)
(585.00)
300.00
0.00

$(295.00) $(885.00)

$(2,950.00)

$(885.00)

1.19%
4
1
2008
30
30
30
0
$136.95
4,108.64
3,286.91
821.73
0.00
308.15
513.58
600.00
(86.42)
(30.25)
(56.17)
200.00
0.00
0.00
$(256.17)

4.32%
5
2
2009
138
108
108
0
$139.69
15,086.93
12,069.55
3,017.39
0.00
1,131.52
1,885.87
300.00
1,585.87
555.05
1,030.81
100.00
0.00
0.00
$930.81

2.54%
6
3
2010
202
64
51
13
$142.49
170.87
9,488.14
7,590.51
1,897.63
0.00
711.61
1,186.02
0.00
1,186.02
415.11
770.91
0.00
0.00
0.00
$770.91

3.30%
7
4
2011
284
82
41
41
$145.34
174.28
13,104.49
10,483.59
2,620.90
0.00
982.84
1,638.06
0.00
1,638.06
573.32
1,064.74
0.00
0.00
0.00
$1,064.74

3.35%
8
5
2012
368
84
42
42
$148.24
177.77
13,692.60
10,954.08
2,738.52
0.00
1,026.94
1,711.57
0.00
1,711.57
599.05
1,112.52
0.00
0.00
0.00
$1,112.52

Exhibit 10
Information on Comparable Companies
(Specially calculated betas estimated from daily stock
and market returns over the periods indicated)

Boeing
Percentage of revenues derived from
government (defense and space)
Estimated betas

Lockheed
Martin

Northrop
Grumman

Raytheon

46%

93%

91%

73%

1. Value Line1

1.05

0.60

0.70

0.80

2. Calculated against the S&P 500

index:2
60 months
21 months
60 trading days

0.80
1.03
1.45

0.36
0.38
0.34

0.34
0.31
0.27

0.43
0.46
0.66

3. Calculated against the NYSE

composite index:2
60 months
21 months
60 trading days
Effective marginal tax rate
Market-value debt/equity ratios

1.00
1.17
1.62
0.35
0.525

0.49
0.44
0.37
0.35
0.410

0.44
0.36
0.30
0.35
0.640

0.59
0.53
0.73
0.35
0.624

Value Line betas are calculated from a regression analysis between the weekly percentage change
in the price of a stock and the weekly percentage changes of the New York Stock Exchange Composite
Index. The beta is calculated using the last five years of data.
2
Regression periods for the 60-day, 21-month and 60 month begin on March 20, 2003, September 17, 2001 and June 16, 1998
Regression periods end on June 16, 2003.

2001 and June 16, 1998 respectively.

Exhibit 11
Outstanding Bonds of the Boeing Company
as of June 2003
($ values in millions)
Debt amount
$202
$298
$249
$175
$349
$597
$398
$300
$247
$249
$173
$393
$300
$100
$173
$125

Debt rating
AAAAAAAAAAAAAAAA-

Coupon
7.625%
6.625%
6.875%
8.100%
9.750%
6.152%
8.750%
7.950%
7.250%
8.750%
8.625%
6.125%
6.625%
7.500%
7.825%
6.875%

Maturity
2/15/2005
6/1/2005
11/1/2006
11/15/2006
4/1/2012
2/15/2013
8/15/2021
8/15/2024
6/15/2025
9/15/2031
11/15/2031
2/15/2033
2/15/2038
8/15/2042
4/15/2043
10/15/2043

Price
106.175
105.593
110.614
112.650
129.424
103.590
127.000
126.951
114.506
131.000
138.974
103.826
106.715
119.486
132.520
110.084

Yield to Maturity
3.911%
3.393%
3.475%
4.049%
5.470%
4.657%
6.239%
5.732%
6.047%
6.337%
5.805%
5.850%
6.153%
6.173%
5.777%
6.191%