March 2005 
Volume 03, Issue 10 
Straight Talk

Here’s what financial success looks like—for Boeing and you

Harry Stonecipher
President and CEO

Harry StonecipherI hope that by now you know that one of the most important things Boeing people can do for the company— and by extension for themselves—is execute their business plans successfully.

What does successful execution of business plans look like? How do we measure it?

We’re about to achieve a little more clarity on that point.

Boeing is introducing a new set of enterprise financial targets in 2005. Simply put, these are a set of performance measures and goals that provide a balanced approach to how we manage the company, measure our progress and build sustaining value.

Over the long term and at the corporate level, Boeing wants to achieve

• Strong revenue growth.

• 7 percent profit after taxes.

• Strong operating cash flows (greater than 10 percent of revenues).

• Greater than a 20 percent return on net assets.

There’s nothing wrong with Economic Profit, the financial measure that we’ve been using. But Economic Profit is a concept that’s not well understood outside Boeing. Our new enterprise financial targets are widely used externally and provide consistency between the way we talk about Boeing’s financial performance among ourselves and with key stakeholders such as customers and investors.

We start measuring to the new targets this year. For incentive compensation calculations, Economic Profit will remain the guiding metric in 2005. In 2006, incentive compensation will be based on performance against the new targets.

I see the new set of targets as an evolution of the already disciplined approach Boeing has to running our business. The new targets will provide everyone at Boeing a common set of metrics that drive superior financial performance.

Text: Are the new fi nancial targets a magic formula? No. But the key to achieving them is pretty simple: Execute the business.Used in combination with Boeing’s Long Range Business Plan, the enterprise financial targets provide a continuous “reality check” that we’re doing the right thing. They will help us identify gaps, reassess tactics and make decisions that will provide for balanced, sustainable growth well into the future.

Are these new targets a magic formula? No. But the key to achieving them is pretty simple: Execute the business. In this, every Boeing employee plays a key role. Whether it’s reducing cycle time, cutting costs, or creating innovative ideas for new products or markets, we all have a part to play. Boeing employees at all levels and in all functions are integral to our efforts to maximize revenues and earnings, optimize return on assets and maintain strong cash flow.

Why should you care? Because your good work flows through the company and back to you.

The more successful we are at achieving top financial performance, the more the company will grow and the more opportunities will be created for employees. Top financial performance is what makes it possible for companies to provide their people the most competitive pay and benefits, stable jobs and better opportunities for career development.

A healthy, well-performing Boeing also is in a better position to contribute to education, social services, the arts, and other causes in the communities where its people live, work and do business.

I hope you will develop a working knowledge of these new targets. These terms and concepts are important for you to know and use. You can learn more by reading what Chief Financial Officer James Bell has to say about them on Page 46 of this issue of Boeing Frontiers. Look for more articles in upcoming issues.


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