New York, December 19, 2012 -- Moody's Investors Service said that The Boeing Company's (Boeing, A2 stable) announcement that it is raising its quarterly dividend by 10% and resuming its share repurchase program (with repurchases between $1.5 billion and $2 billion expected in 2013) will not impact the company's ratings. The increased dividend pay-out and share buy-back authorization have been expected and are already incorporated in the credit assessment underlying the company's financial profile and its debt ratings, according to Moody's. "Boeing is entering a stage of its operating cycle wherein we expect increasing amounts of free cash flow--currently anticipated to be north of $3.5 billion in 2013, net of another $1.5 billion in pension contributions--will be generated as a very robust order backlog transitions to higher delivery rates over the next several years," noted Russell Solomon, Moody's Senior Vice President and lead analyst for the company. The rating agency highlighted lingering concerns about Boeing's growing pension liability and uncertainties with respect to budgetary pressures that could adversely affect the company's defense business, which will temper otherwise stronger growth in its commercial aerospace activities. Moody's also stressed the importance of ongoing active management of Boeing's supply chain to ensure targeted production rate increases are seamlessly met. "We expect that increased shareholder-friendly activities will be undertaken in a fiscally prudent manner within the bounds of the company's available cash flow, and further that liquidity will remain strong and requisite ongoing development funding will be unconstrained by such initiatives" added Solomon. Maintenance of a high level of financial flexibility is very important for the company, according to Moody's, as a strong liquidity profile could be needed if significant disruptions occur in the production ramp-up, key suppliers and/or customers require extra support, and/or new development programs for its long-lived assets again contribute to large and potentially abrupt swings in working capital. For more information, please see the associated Issuer Comment on www.moodys.com.
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