Company: BA
Filing Date: 2025-02-03
Form Type: 10-K
Source: 0000012927-25-000015
Chunk: 524

Company: BOEING CO
Filing Date: 2025-02-03
Form: 10-K
Item: Item 7
Chunk 524
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 determined by the regulators.

To ensure reliability in our estimates, we employ a rigorous estimating process that is reviewed and updated on a quarterly basis. This includes reassessing the accounting quantity. Changes in estimates of program gross profit margins are normally recognized on a prospective basis; however, when estimated costs to complete a program plus costs already included in inventory exceed estimated revenues from the program, a loss is recorded in the current period. Reductions to the estimated loss are included in the gross profit margin for undelivered units in the accounting quantity whereas increases to the estimated loss are recorded as an earnings charge in the period in which the loss is determined.

The 777X and 767 programs recognized earnings charges totaling $3,499 million and $580 million during the year ended December 31, 2024. Adverse changes to the revenue and/or cost estimates for these programs could result in further earnings charges in future periods. Lower production rates and the IAM 751 work stoppage and new agreement as well as pay enhancements for certain other non-union employees have also pressured margins on other commercial airplane programs.

Due to the significance of judgment in the estimation process described above, it is reasonably possible that changes in underlying circumstances or assumptions could have a material effect on program gross margins. If the combined gross margin percentages for our commercial airplane programs had 

50

been estimated to be 1% higher or lower it would have an approximately $210 million impact on operating earnings for the year ended December 31, 2024. 

Pension Plans

Many of our employees have earned benefits under defined benefit pension plans. The majority of employees that had participated in defined benefit pension plans have transitioned to a company-funded defined contribution retirement savings plan. Accounting rules require an annual measurement of our projected obligation and plan assets. These measurements are based upon several assumptions. Future changes in assumptions or differences between actual and expected outcomes can significantly affect our future annual expense, projected benefit obligation and Shareholders’ equity.

The projected benefit obligation is sensitive to discount rates. The projected benefit obligation would decrease by $1,120 million or increase by $1,240 million if the discount rate increased or decreased by 25 basis points. A 25 basis point change in the discount rate would not have a significant impact on pension cost. However, net periodic pension cost is sensitive to changes in the expected long-term rate of asset return. A decrease or increase of 25 basis points in the expected long-term rate of asset return would have increased or decreased 2024 net periodic pension cost by $