8/25/2019 Print canvas 2029 2030 2031 Revenues 2032 2033 Planes delivered 7E7 planes 115 58 115 115 787 Stretch planes 58 115 58 115 57 57 57 58 7E7 price 57 7E7 Stretch price 207.58 $211.73 248.92 $215.96 $220.28 253.90 258.98 $224.69 Total product revenues 6,228.00 264.16 269.44 Cost of goods sold 26,752.56 7,833.36 Gross profit 20,982.40 7,287.61 1,402.05 5.350.51 1,830.09 28,390.03 5.245.60 Depreciation 39.86 5.457.52 22,266.69 5.566.67 22,712.02 5,678.01 GS&A expense 967 10 41.10 2.046 57 43.19 2.087.50 44.07 Operating profit (before 2,129.25 R&D R&D expense 3,238.64 603.24 ,302.97 615.31 3,368.82 5,504.6 Pretax profit 27.62 3,435.98 640.17 652.97 Taxes (or tax credit) 635.39 922.39 2,687.66 40.68 2,741.21 2059 42 2,795.81 2,851.71 After-tax profit Capital expenditure 1,713.00 41.96 ,746.98 978.53 998.10 Depreciation add-back 42.80 1,781.78 1,817.28 853.61 43.66 44.53 45.42 Change in WCR 39.86 34.46 41.10 42.13 35.15 43.19 35.85 Annual free cash flow 36 57 $1,676.45 1,710.13 $1,744.41 $1,779.37 $1,814.96 Revenues 2034 2035 2036 2037 Planes delivered 7E7 planes 115 58 58 115 767 Stretch planes 7 price 57 57 57 58 274.83 280 33 $238.44 57 7 Stretch price 229.18 233.77 285.93 $243.21 Total product revenues 28,957.83 29,536.99 291.65 Cost of goods sold 23,166.26 23,629.59 30,127.73 30,730.28 Gross profit 5,791.57 5,907.40 24,102 18 Depreciation 44.59 6,025.55 4,584.22 6,146.06 GS&A expense 45.33 45 08 2171.84 45.25 Operating profit (before R&D) 5.575.14 2,215.27 R&D expense 666.03 ,646.80 2,259.58 3,720.72 304.77 3,796.21 Pretax profit Taxes (or tax credit 2,909.11 679.35 ,967.45 692.9 1,038.61 3,027-78 706.80 1.018.19 After-tax profit 928.84 1,059.72 3,089.41 1,890.92 1,968.06 1,081.29 Capital expenditure 46.33 2,008.12 Depreciation add-back 44 59 47.26 49.17 Change in W/CR 38.04 45.33 48.20 38 80 45.25 45.08 Annual free cash flow $1,851.14 $1,888.10 $1,925.52 40.37 $1,963.65 Exhibit 9 e Boeing 7E7 Sensitivity Analysis of Project IRRs by Price, Volume, Development, and Production Costs Unit Volume (First 20 Years) 0% Price Premium Above Expected Minimum Price 5% 1,500 10% 10.5% 15% 1,750 11.9% 10.9/ 12.3% 11.3% 11.7% 2,000 13.0% 12.7% 13.5% 13.1% 2.250 13.9% 14.1% 14.4% 2,500 14.6% 15.2% 15.7% 15.1% 15.5% 2.750 16.1% 16.1% 16.6% 3,000 16.6% 17.1% 17.1% 17.6% 17.6% 18.1% 18.6% Development Costs 78% Cost of Goods Sold as a Percentage of Sales 80% $6,000,000,000 82% 84% 21.3% $7,000,000,000 18.7% 19.4% 15.9% 12.6% $8,000,000,000 17.0% 17.9% 14.4% 11.3% $9,000,000,000 15.7% 13.2% 16.6% 14.5% 12.1% 10.3% $10,000,000,000 15.5% 9.4% 13.5% 11.2% 8.6% Note: The IRR consistent with "base case" assumptions is 15.7% and is indicated in italics in the table. Source: Case writer analysis. Exhibit 10 The Boeing 7E7 periods indicated) Information on Comparable Companies (Specially calculated betas estimated from daily stock and market returns over the 12/168/25/2019 Print canvas Boeing Lockheed Northrop Raytheon Percentage of revenues derived from Martin Grumman government (defense and space) 46% 93% Estimated betas 91% 73% Value Line 1.05 0.60 2. Calculated against the S&P 500 index: 2 0.70 0.80 60 months 21 months 60 trading days 0.80 0.36 0.34 1.03 0.38 0.43 3. Calculated against the NYSE composite 1.45 0.34 0.31 0.27 0.46 index: 2 0 66 60 months 21 months 60 trading days 1.00 0.49 1.17 0.44 0.44 1.62 0.36 0.59 0.53 0.37 0.30 Effective marginal tax rate 0.35 0.35 0.35 0.73 Market-value debt/ equity ratios |0.525 0.410 0.35 xces: Case writes analysis; Value Line Investment Sang 0.640 0.624 Value Line betas were calculated from a regression analysis between the weekly percentage change in price of a stock and the weekly percentage e New York Stock Exchange Composite Index. The beta was calculated using the last five years of data. sion periods for the 60-day, 21-month, and 60-month began on March 20, 2003, September 17, 2001, and June 16, 1998, respectively. Regression periods ended on June 16, 2003. Exhibit 11 The Boeing 7E7 Outstanding Bonds of the Boeing Company as of June 2003 ($ values in millions) Debt Amount Debt Rating Coupon $202 Maturity 7.625% Price $298 A- /15/2005 A- 6.625% .06.175 Yield To Maturity 3.911% $249 A- 6.875% 6/1/2005 105.593 11/1/2006 3.393% $175 110.614 3.475% $349 A- A- 8.100% 9.750% 11/15/2006 4.049% $597 4/1/2012 112.650 29.424 5.470% $398 $300 A- 6.125% 8.750% 2/15/2013 03.590 4.657% 3/15/2021 127.000 6.239% $247 A- $249 A- 7.950% 8/15/2024 7.250% 126.951 5.732% 6/15/2025 114.506 6.047% $173 8.750% 9/15/2031 131.000 $393 8.625% 6.337% A- 11/15/2031 138.974 5.805% $300 A - 6.125% 2/15/2033 103.826 5.850% $100 $173 A - 7.500% 2/15/2038 106.715 8/15/2042 5.153% 7.825% 119.486 6.173% $125 4/15/2043 6.875% 10/15/2043 132.520 110.084 5.777% 6.191% Note: This table does not include the outstanding debt of Boeing's financing subsidiary, Boeing Capital Corporation. Sources: Boeing Company 10-Q; Bloomberg Financial Services; and Mergent Online. Appendix The Boeing 7E7 Assumptions Underlying the Forecast of Cash Flows 13/16\fAirframe Lifecycle Annual Units Sold/Total Units Sold 10.00% 9.00% 8.00% Percent of Total Unit Sales 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Year Since Introduction