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| Notes
to Consolidated Financial Statements | | |
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| The Commercial Airplanes segment is subject to both operational and external
business environment risks. Operational risks that can seriously disrupt the Company’s
ability to make timely delivery of its commercial jet aircraft and meet its contractual
commitments include execution of internal performance plans, product performance
risks associated with regulatory certifications of the Company’s commercial
aircraft by the U.S. Government and foreign governments, other regulatory uncertainties,
collective bargaining labor disputes, performance issues with key suppliers and
subcontractors and the cost and availability of energy resources, such as electrical
power. Aircraft programs, particularly new aircraft models such as the 717 program,
face the additional risk of pricing pressures and cost management issues inherent
in the design and production of complex products. Financing support may be provided
by the Company to airlines, some of which are unable to obtain other financing.
While the Company’s principal operations are in the United States, Canada,
and Australia, some key suppliers and subcontractors are located in Europe and
Japan. External business environment risks include adverse governmental export
and import policies, factors that result in significant and prolonged disruption
to air travel worldwide, and other factors that affect the economic viability
of the commercial airline industry. Examples of factors relating to external business
environment risks include the volatility of aircraft fuel prices, global trade
policies, worldwide political stability and economic growth, acts of aggression
that impact the perceived safety of commercial flight, escalation trends inherent
in pricing the Company’s aircraft, and a competitive industry structure which
results in market pressure to reduce product prices. |
In
addition to the foregoing risks associated with the Commercial Airplanes segment,
the Military Aircraft and Missile Systems segment and the Space and Communications
segment are subject to changing priorities or reductions in the U.S. Government
defense and space budget, and termination of government contracts due to unilateral
government action (termination for convenience) or failure to perform (termination
for default). Civil, criminal or administrative proceedings involving fines, compensatory
and treble damages, restitution, forfeiture and suspension or debarment from government
contracts may result from violations of business and cost classification regulations
on U.S. Government contracts. |
The launch services market
has some degree of uncertainty since global demand is driven in part by the launch
customers’ access to capital markets. Additionally, some of the Company’s
competitors for launch services receive direct or indirect government funding.
The satellite market includes some degree of risk and uncertainty relating to
the attainment of technological specifications and performance requirements. |
Risk associated with the Customer and Commercial Financing segment
includes interest rate risks, asset valuation risks, specifically, aircraft valuation
risks, and credit and collectability risks of counterparties. |
As
of December 31, 2001, the Company’s principal collective bargaining agreements
were with the International Association of Machinists and Aerospace Workers (IAM),
representing 24% of employees (current agreements expiring September and October
2002, and May 2004); the Society of Professional Engineering Employees in Aerospace
(SPEEA), representing 14% of employees (current agreements expiring December 2002
and February 2004); the United Automobile, Aerospace and Agricultural Implement
Workers of America (UAW), representing 4% of employees (current agreements expiring
September 2002, May 2003, and April 2004); and Southern California Professional
Engineering Association (SCPEA), representing 2% of employees (current agreement
expiring March 2005). |
Sales and other operating revenue
by geographic area consisted of the following:
| | |
| Year ended December 31, |  | 2001 | | 2000 | 1999 | |
| |
| Asia, other than China | | China | | Europe |
| Oceania | | Africa | | Western
Hemisphere, other than the United States | | |
| $ 7,112 |
| 1,504 | | 8,434 |
| 895 | | 573 |
| 875 | | |
| $ 5,568 |
| 1,026 | | 9,038 |
| 887 | | 542 |
| 559 | |
| $10,776 | | 1,231 |
| 9,678 | | 942 |
| 386 | | 461 |
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| United States | |
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| Total sales | | $58,198 | | $51,321 | $57,993 | |
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| Military Aircraft and Missile Systems segment and Space and Communications
segment combined sales were approximately 29%, 13% and 17% of total sales in Europe
for 2001, 2000 and 1999, respectively. Defense sales were approximately 10%, 9%
and 17% of total sales in Asia, excluding China, for the same respective years.
Exclusive of these amounts, Military Aircraft and Missile Systems segment and
Space and Communications segment sales were principally to the U.S. Government.
Sales to the U.S. Government represented 33%, 34% and 25% of consolidated sales
for 2001, 2000 and 1999, respectively. | | The information in the
following tables is derived directly from the segments’ internal financial
reporting used for corporate management purposes. The expenses, assets and liabilities
attributable to corporate activity are not allocated to the operating segments.
Approximately 3% of operating assets are located outside the United States. |
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