Boeing Reports
Second-Quarter Results
CHICAGO, July 27, 2016
--
- Revenue increased to $24.8
billion on strong commercial deliveries and services
growth
- Loss of $0.37 per share
(GAAP) and core (non-GAAP)* loss of $0.44 per share reflect $3.23 per share impact related to previously
announced 787 R&D reclassification and 747 & Tanker
charges
- Strong operating cash flow of $3.2
billion; repurchased 15 million shares for $2.0 billion
- Backlog remains robust at $472
billion with nearly 5,700 commercial airplane
orders
- Cash and marketable securities of $9.3 billion provide strong
liquidity
- Reaffirmed cash & revenue guidance; EPS reflects
reclassification, charges, solid performance & tax
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Table 1. Summary Financial Results |
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Second Quarter |
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First Half |
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(Dollars in Millions, except per share
data) |
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2016 |
2015 |
Change |
2016 |
2015 |
Change |
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Revenues |
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$24,755 |
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$24,543 |
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1% |
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$47,387 |
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$46,692 |
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1% |
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GAAP |
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Earnings/(Loss) From Operations |
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($419) |
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$1,683 |
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(125)% |
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$1,369 |
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$3,702 |
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(63)% |
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Operating Margin |
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(1.7)% |
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6.9% |
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(8.6) Pts |
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2.9% |
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7.9% |
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(5.0) Pts |
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Net Earnings/(Loss) |
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($234) |
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$1,110 |
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(121)% |
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$985 |
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$2,446 |
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(60)% |
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Earnings/(Loss) Per Share |
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($0.37) |
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$1.59 |
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(123)% |
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$1.51 |
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$3.46 |
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(56)% |
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Operating Cash Flow |
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$3,234 |
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$3,297 |
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(2)% |
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$4,465 |
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$3,385 |
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32% |
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Non-GAAP* |
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Core Operating Earnings/(Loss) |
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($488) |
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$1,713 |
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(128)% |
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$1,206 |
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$3,845 |
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(69)% |
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Core Operating Margin |
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(2.0)% |
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7.0% |
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(9.0) Pts |
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2.5% |
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8.2% |
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(5.7) Pts |
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Core Earnings/(Loss) Per Share |
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($0.44) |
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$1.62 |
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(127)% |
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$1.35 |
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$3.59 |
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(62)% |
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* |
Non-GAAP measures. Complete definitions of
Boeing's non-GAAP measures are on page 7, "Non-GAAP Measures
Disclosures." |
The Boeing Company [NYSE: BA] reported second-quarter revenue of
$24.8 billion on strong commercial
deliveries and services growth (Table 1). GAAP loss per share of
$0.37 and core loss per share
(non-GAAP)* of $0.44 reflect the
previously announced 787 cost reclassification ($1.33 per share) and charges on the 747 program
($1.28 per share) and the KC-46
Tanker program ($0.62 per share),
partially offset by solid execution and higher volume.
"The underlying operating performance of the company remains
solid with our commercial and defense teams again delivering strong
revenues and operating cash flow. Actions taken during the quarter
that impacted our earnings were the right, proactive steps to
reduce risk and strengthen our position for the future," said
Chairman, President and Chief Executive Officer Dennis Muilenburg. "Our strong cash generation
also supported our ongoing commitment to invest in product
innovation and in our people, and return substantial cash to
shareholders through stock repurchases and dividends."
"As we look forward to the second half of the year, we
anticipate continued strong operating performance across our
production and services programs on generally healthy demand for
our broad portfolio of market-leading offerings. Our commercial
airplane development programs remain on track and we have
successfully completed the flight testing required for customer
approval of key KC-46 production milestones."
"Overall our teams remain intensely focused on improving
productivity and quality, building out our large and diverse
backlog, investing in future growth, and delivering increasing
value to all of our stakeholders."
GAAP earnings per share guidance for 2016 has been adjusted to
between $6.40 and $6.60 from
$8.45 and $8.65 and core earnings per
share (non-GAAP)* guidance has been adjusted to between
$6.10 and $6.30 from $8.15 and $8.35 to reflect the impact of the 787
R&D reclassification and the 747 and Tanker charges, solid
performance and tax benefits.
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Table 2. Cash Flow |
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Second Quarter |
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First Half |
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(Millions) |
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2016 |
2015 |
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2016 |
2015 |
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Operating Cash Flow |
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$3,234 |
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$3,297 |
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$4,465 |
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$3,385 |
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Less Additions to Property, Plant &
Equipment |
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($671) |
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($692) |
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($1,419) |
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($1,266) |
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Free Cash Flow* |
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$2,563 |
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$2,605 |
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$3,046 |
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$2,119 |
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* |
Non-GAAP measures. Complete definitions of
Boeing's non-GAAP measures are on page 7, "Non-GAAP Measures
Disclosures." |
Operating cash flow in the quarter was $3.2 billion, largely reflecting commercial
airplane production rates and solid operating performance (Table
2). During the quarter, the company repurchased 15.3 million shares
for $2.0 billion, leaving
$8.5 billion remaining under the
current repurchase authorization which is expected to be completed
over approximately the next two years. The company also paid
$691 million in dividends in the
quarter, reflecting an approximately 20 percent increase in
dividends per share compared to the same period of the prior
year.
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Table 3. Cash, Marketable Securities and Debt
Balances |
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Quarter-End |
(Billions) |
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Q2
16 |
Q1
16 |
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Cash |
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$8.6 |
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$7.9 |
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Marketable Securities1 |
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$0.7 |
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$0.5 |
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Total |
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$9.3 |
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$8.4 |
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Debt Balances: |
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The Boeing Company, net of intercompany loans to
BCC |
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$8.7 |
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$7.6 |
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Boeing Capital, including intercompany loans |
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$2.3 |
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$2.4 |
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Total Consolidated Debt |
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$11.0 |
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$10.0 |
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1 |
Marketable securities consists primarily of
time deposits due within one year classified as "short-term
investments." |
Cash and investments in marketable securities totaled
$9.3 billion, up from $8.4 billion at the beginning of the quarter.
Debt was $11.0 billion, up from the
beginning of the quarter, primarily due to the issuance of new debt
(Table 3).
Total company backlog at quarter-end was $472 billion, down from $480 billion at the beginning of the quarter, and
included net orders for the quarter of $17
billion.
Segment Results
Commercial Airplanes
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Table 4. Commercial Airplanes |
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Second Quarter |
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First Half |
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(Dollars in Millions) |
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2016 |
2015 |
Change |
2016 |
2015 |
Change |
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Commercial Airplanes Deliveries |
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199 |
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197 |
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1% |
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375 |
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381 |
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(2)% |
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Revenues |
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$17,456 |
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$16,877 |
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3% |
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$31,855 |
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$32,258 |
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(1)% |
Earnings/(Loss) from Operations |
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($973) |
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$1,206 |
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(181)% |
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$60 |
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$2,823 |
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(98)% |
Operating Margin |
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(5.6)% |
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7.1% |
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(12.7) Pts |
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0.2% |
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8.8% |
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(8.6) Pts |
Commercial Airplanes second-quarter revenue increased 3 percent
to $17.5 billion on higher volume and
mix (Table 4). Second-quarter operating margin was negative 5.6
percent, reflecting previously announced R&D reclassification
of $1,235 million on the 787 program,
a pre-tax charge of $1,188 million on
the 747 program, and a pre-tax charge of $354 million on the KC-46 Tanker program. The
results also reflect higher planned R&D and solid execution.
Second-quarter operating margin excluding the reclassification and
charges (non-GAAP)* was 10.3%.
During the quarter, the 787 program reached a 12 per month
delivery rate and the company opened the new 777X Composite Wing
Center in Everett. The 737 program rolled out the first two 737 MAX
production airplanes and has captured over 3,200 orders for the 737
MAX since launch, including an order for 100 737 MAX 200 airplanes
from Vietjet during the quarter. The 737 MAX development program is
progressing smoothly and entry into service is being
accelerated.
Commercial Airplanes booked 152 net orders during the quarter.
Backlog remains strong with nearly 5,700 airplanes valued at
$417 billion.
Defense, Space & Security
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Table 5. Defense, Space & Security |
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Second Quarter |
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First Half |
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(Dollars in Millions) |
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2016 |
2015 |
Change |
2016 |
2015 |
Change |
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Revenues1 |
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Boeing Military Aircraft |
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$2,979 |
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$3,474 |
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(14)% |
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$6,638 |
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$6,200 |
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7% |
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Network & Space Systems |
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$1,810 |
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$1,938 |
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(7)% |
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$3,545 |
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$3,670 |
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(3)% |
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Global Services & Support |
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$2,385 |
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$2,132 |
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12% |
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$4,947 |
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$4,383 |
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13% |
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Total BDS Revenues |
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$7,174 |
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$7,544 |
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(5)% |
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$15,130 |
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$14,253 |
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6% |
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Earnings from Operations1 |
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Boeing Military Aircraft |
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$175 |
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$121 |
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45% |
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$509 |
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$380 |
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34% |
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Network & Space Systems |
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$153 |
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$151 |
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1% |
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$301 |
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$318 |
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(5)% |
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Global Services & Support |
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$265 |
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$274 |
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(3)% |
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$605 |
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$591 |
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2% |
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Total BDS Earnings from Operations |
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$593 |
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$546 |
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9% |
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$1,415 |
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$1,289 |
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10% |
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Operating Margin |
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8.3% |
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7.2% |
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1.1 Pts |
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9.4% |
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9.0% |
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0.4 Pts |
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1 |
During the first quarter of 2016, certain
programs were realigned between Boeing Military Aircraft and Global
Services & Support. |
Defense, Space & Security's second-quarter revenue was
$7.2 billion. Second-quarter
operating margin was 8.3 percent, reflecting the previously
announced $219 million pre-tax charge
recorded at Boeing Military Aircraft on the KC-46 Tanker program
(Table 5).
Boeing Military Aircraft (BMA) second-quarter revenue was
$3.0 billion, reflecting lower
planned C-17 and Chinook deliveries. Operating margin was 5.9
percent, reflecting the KC-46 Tanker charge. During the quarter,
BMA was awarded contracts for 24 Apache and 12 Chinook
helicopters.
Network& Space Systems (N&SS) second-quarter revenue was
$1.8 billion. Operating margin
increased to 8.5 percent, reflecting performance and timing on
United Launch Alliance launches.
Global Services & Support (GS&S) second-quarter revenue
increased to $2.4 billion, reflecting
higher volume in Aircraft Modernization & Sustainment.
Operating margin was 11.1 percent largely reflecting contract
mix.
Backlog at Defense, Space & Security was $55 billion, of which 37 percent represents
orders from international customers.
Additional Financial Information
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Table 6. Additional Financial
Information |
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Second Quarter |
First Half |
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(Dollars in Millions) |
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2016 |
2015 |
2016 |
2015 |
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Revenues |
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Boeing Capital |
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$84 |
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$115 |
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$148 |
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$201 |
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Unallocated items, eliminations and other |
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$41 |
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$7 |
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$254 |
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($20) |
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Earnings from Operations |
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Boeing Capital |
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$18 |
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$11 |
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$23 |
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$31 |
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Unallocated pension/postretirement |
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$69 |
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($30) |
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$163 |
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($143) |
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Other unallocated items and eliminations |
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($126) |
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($50) |
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($292) |
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($298) |
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Other income, net |
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$13 |
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$15 |
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$39 |
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$3 |
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Interest and debt expense |
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($73) |
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($75) |
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($146) |
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($136) |
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Effective tax rate |
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51.1% |
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31.6% |
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21.9% |
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31.5% |
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At quarter-end, Boeing Capital's net portfolio balance was
$3 billion, down from the beginning
of the quarter. Total pension expense for the second quarter was
$463 million, down from $523 million in the same period of the prior
year. Other unallocated items and eliminations decreased from the
same period in the prior year primarily due to higher deferred
compensation expense and elimination of intercompany profit. The
effective tax rate for the second quarter was increased from the
same period in the prior year primarily due to lower pre-tax
income. During the quarter, the company adopted a new accounting
standard for share-based compensation payments which resulted in a
$54 million tax benefit ($0.08 per share).
Outlook
The company's 2016 updated financial and delivery guidance
(Table 7) reflects the impact of the 787 R&D reclassification
and the 747 and Tanker charges, solid performance and tax
benefits.
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Table 7. 2016 Financial Outlook |
Current |
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Prior |
(Dollars in Billions, except per share
data) |
Guidance |
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Guidance |
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The Boeing Company |
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Revenue |
$93.0 - 95.0 |
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$93.0 - 95.0 |
GAAP Earnings Per Share |
$6.40 -
6.60 |
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$8.45 - 8.65 |
Core Earnings Per Share* |
$6.10 -
6.30 |
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$8.15 - 8.35 |
Operating Cash Flow |
~$10.0 |
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~$10.0 |
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Commercial Airplanes |
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Deliveries |
740 - 745 |
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740 - 745 |
Revenue |
$64.0 - 65.0 |
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$64.0 - 65.0 |
Operating Margin |
4.5% -
5.0 |
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~9.0% |
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Defense, Space & Security |
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Revenue |
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Boeing Military Aircraft |
~$12.3 |
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~$12.3 |
Network & Space Systems |
~$7.3 |
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~$7.3 |
Global Services & Support |
~$9.4 |
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~$9.4 |
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Total BDS Revenue |
$28.5 - 29.5 |
|
$28.5 - 29.5 |
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Operating Margin |
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Boeing Military Aircraft |
~9.5% |
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~10.0% |
Network & Space Systems |
~9.0% |
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~9.0% |
Global Services & Support |
~12.0% |
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~11.5% |
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Total BDS Operating Margin |
>10.0% |
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>10.0% |
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Boeing Capital |
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Portfolio Size |
Stable |
|
Stable |
Revenue |
~$0.3 |
|
~$0.3 |
Pre-Tax Earnings |
~$0.05 |
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~$0.05 |
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Research & Development |
~ $4.8 |
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~ $3.6 |
Capital Expenditures |
~ $2.8 |
|
~ $2.8 |
Pension Expense 1 |
~ $2.1 |
|
~ $2.1 |
Effective Tax Rate |
~ 23.0% |
|
~ 30.0% |
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1 |
Approximately ($0.1) billion is expected to be
recorded in unallocated items and eliminations |
* |
Non-GAAP measures. Complete definitions of
Boeing's non-GAAP measures are on page 7, "Non-GAAP Measures
Disclosures." |
Non-GAAP Measures Disclosures
We supplement the reporting of our financial information
determined under U.S. generally accepted accounting principles
(GAAP) with certain non-GAAP financial information. The non-GAAP
financial information presented excludes certain significant items
that may not be indicative of, or are unrelated to, results from
our ongoing business operations. We believe that these non-GAAP
measures provide investors with additional insight into the
company's ongoing business performance. These non-GAAP measures
should not be considered in isolation or as a substitute for the
related GAAP measures, and other companies may define such measures
differently. We encourage investors to review our financial
statements and publicly-filed reports in their entirety and not to
rely on any single financial measure. The following definitions are
provided:
Core Operating Earnings/(Loss), Core Operating Margin and Core
Earnings/(Loss) Per Share
Core operating earnings/(loss) is defined as GAAP
earnings/(loss) from operations excluding unallocated
pension and post-retirement expense. Core operating margin is
defined as core operating earnings/(loss) expressed as a percentage
of revenue. Core earnings/(loss) per share is defined as GAAP
diluted earnings/(loss) per share excluding the net earnings
per share impact of unallocated pension and post-retirement
expense. Unallocated pension and post-retirement expense
represents the portion of pension and other post-retirement costs
that are not recognized by business segments for segment reporting
purposes. Pension costs, comprising service and prior service costs
computed in accordance with Generally Accepted Accounting
Principles in the United States of
America (GAAP) are allocated to Commercial Airplanes.
Pension costs allocated to BDS segments are computed in accordance
with U.S. Government Cost Accounting Standards (CAS), which employ
different actuarial assumptions and accounting conventions than
GAAP. CAS costs are allocable to government contracts. Other
postretirement benefit costs are allocated to all business segments
based on CAS, which is generally based on benefits paid. Management
uses core operating earnings, core operating margin and core
earnings per share for purposes of evaluating and forecasting
underlying business performance. Management believes these core
earnings measures provide investors additional insights into
operational performance as they exclude unallocated pension and
post-retirement costs, which primarily represent costs driven by
market factors and costs not allocable to government contracts. A
reconciliation between the GAAP and non-GAAP measures is provided
on page 14.
Commercial Airplanes Operating Margin Excluding the
Reclassification and Charges
Commercial Airplanes GAAP operating margin for the three months
ended June 30, 2016 includes research
and development expense of $1,235
million related to the reclassification of costs associated
with two 787 flight test aircraft from program inventory, a
reach-forward loss on the 747 program of $1,188 million, and a reach-forward loss recorded
at Commercial Airplanes on the KC-46 Tanker program of $354 million. Management uses Commercial
Airplanes operating margin excluding the reclassification and
charges for the purpose of evaluating underlying business
performance for the three months ended June
30, 2016. Management believes that this measure also helps
investors assess overall trends in our operational performance and
provide additional context for year over year financial results. A
reconciliation between the GAAP and non-GAAP measures is provided
on page 14.
Free Cash Flow
Free cash flow is defined as GAAP operating cash flow
without capital expenditures for property, plant and equipment
additions. Management believes free cash flow provides
investors with an important perspective on the cash available for
shareholders, debt repayment, and acquisitions after making the
capital investments required to support ongoing business operations
and long term value creation. Free cash flow does not represent the
residual cash flow available for discretionary expenditures as it
excludes certain mandatory expenditures such as repayment of
maturing debt. Management uses free cash flow as a measure to
assess both business performance and overall liquidity. Table 2
provides a reconciliation between GAAP operating cash flow and free
cash flow.
Caution Concerning
Forward-Looking Statements
This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995. Words such as "may," "should," "expects," "intends,"
"projects," "plans," "believes," "estimates," "targets,"
"anticipates," and similar expressions are used to identify these
forward-looking statements. Examples of forward-looking statements
include statements relating to our future financial condition and
operating results, as well as any other statement that does not
directly relate to any historical or current fact. Forward-looking
statements are based on our current expectations and assumptions,
which may not prove to be accurate. These statements are not
guarantees and are subject to risks, uncertainties, and changes in
circumstances that are difficult to predict. Many factors could
cause actual results to differ materially and adversely from these
forward-looking statements. Among these factors are risks related
to: (1) general conditions in the economy and our industry,
including those due to regulatory changes; (2) our reliance on our
commercial airline customers; (3) the overall health of our
aircraft production system, planned production rate increases
across multiple commercial airline programs, our commercial
development and derivative aircraft programs, and our aircraft
being subject to stringent performance and reliability standards;
(4) changing budget and appropriation levels and acquisition
priorities of the U.S. government; (5) our dependence on U.S.
government contracts; (6) our reliance on fixed-price contracts;
(7) our reliance on cost-type contracts; (8) uncertainties
concerning contracts that include in-orbit incentive payments; (9)
our dependence on our subcontractors and suppliers, as well as the
availability of raw materials, (10) changes in accounting
estimates; (11) changes in the competitive landscape in our
markets; (12) our non-U.S. operations, including sales to non-U.S.
customers; (13) potential adverse developments in new or pending
litigation and/or government investigations; (14) customer and
aircraft concentration in Boeing Capital's customer financing
portfolio; (15) changes in our ability to obtain debt on
commercially reasonable terms and at competitive rates in order to
fund our operations and contractual commitments; (16) realizing the
anticipated benefits of mergers, acquisitions, joint
ventures/strategic alliances or divestitures; (17) the adequacy of
our insurance coverage to cover significant risk exposures; (18)
potential business disruptions, including those related to physical
security threats, information technology or cyber-attacks,
epidemics, sanctions or natural disasters; (19) work stoppages or
other labor disruptions; (20) significant changes in discount rates
and actual investment return on pension assets; (21) potential
environmental liabilities; and (22) threats to the security of our
or our customers' information.
Additional information concerning these and other factors can be
found in our filings with the Securities and Exchange Commission,
including our most recent Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K. Any
forward-looking statement speaks only as of the date on which it is
made, and we assume no obligation to update or revise any
forward-looking statement, whether as a result of new information,
future events, or otherwise, except as required by law.
Contact:
|
|
|
|
|
|
Investor Relations: |
|
Troy Lahr or Ben Hackman (312) 544-2140 |
Communications: |
|
Bernard Choi (312) 544-2002 |
The
Boeing Company and Subsidiaries |
Consolidated Statements of Operations |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six
months ended
June 30 |
Three months
ended
June 30 |
|
(Dollars in millions, except per share
data) |
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
Sales of products |
|
$42,069 |
|
|
$41,408 |
|
|
$22,184 |
|
|
$21,923 |
|
|
|
|
Sales of services |
5,318 |
|
5,284 |
|
2,571 |
|
2,620 |
|
|
|
|
Total revenues |
47,387 |
|
46,692 |
|
24,755 |
|
24,543 |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products |
(37,210) |
|
(35,627) |
|
(20,265) |
|
(19,247) |
|
|
|
|
Cost of services |
(4,180) |
|
(4,186) |
|
(2,044) |
|
(2,086) |
|
|
|
|
Boeing Capital interest expense |
(32) |
|
(33) |
|
(16) |
|
(17) |
|
|
|
|
Total costs and expenses |
(41,422) |
|
(39,846) |
|
(22,325) |
|
(21,350) |
|
|
|
|
|
5,965 |
|
6,846 |
|
2,430 |
|
3,193 |
|
|
|
|
Income from operating investments, net |
151 |
|
129 |
|
97 |
|
50 |
|
|
|
|
General and administrative expense |
(1,694) |
|
(1,705) |
|
(806) |
|
(760) |
|
|
|
|
Research and development expense, net |
(3,044) |
|
(1,569) |
|
(2,127) |
|
(800) |
|
|
|
|
(Loss)/gain on dispositions, net |
(9) |
|
1 |
|
(13) |
|
|
|
|
|
|
Earnings/(loss) from operations |
1,369 |
|
3,702 |
|
(419) |
|
1,683 |
|
|
|
|
Other income, net |
39 |
|
3 |
|
13 |
|
15 |
|
|
|
|
Interest and debt expense |
(146) |
|
(136) |
|
(73) |
|
(75) |
|
|
|
|
Earnings/(loss) before income taxes |
1,262 |
|
3,569 |
|
(479) |
|
1,623 |
|
|
|
|
Income tax (expense)/benefit |
(277) |
|
(1,123) |
|
245 |
|
(513) |
|
|
|
|
Net earnings/(loss) |
|
$985 |
|
|
$2,446 |
|
|
($234) |
|
|
$1,110 |
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings/(loss) per share |
|
$1.52 |
|
|
$3.50 |
|
|
($0.37) |
|
|
$1.61 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings/(loss) per share |
|
$1.51 |
|
|
$3.46 |
|
|
($0.37) |
|
|
$1.59 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends paid per share |
|
$2.18 |
|
|
$1.82 |
|
|
$1.09 |
|
|
$0.91 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted shares
(millions) |
654.9 |
|
706.6 |
|
636.3 |
** |
698.9 |
|
|
|
|
|
|
** |
As a result of incurring a net loss for the three
months ended June 30, 2016, potential common shares of 6.7 million
were excluded from diluted earnings per share. |
The
Boeing Company and Subsidiaries |
Consolidated Statements of Financial Position |
(Unaudited) |
|
|
|
|
|
|
|
|
(Dollars in millions, except per share
data) |
June 30
2016 |
|
December 31
2015 |
|
|
Assets |
|
|
|
Cash and cash equivalents |
|
$8,605 |
|
|
$11,302 |
|
|
Short-term and other investments |
660 |
|
750 |
|
|
Accounts receivable, net |
9,809 |
|
8,713 |
|
|
Current portion of customer financing, net |
251 |
|
212 |
|
|
Inventories, net of advances and progress
billings |
44,182 |
|
47,257 |
|
|
Total current assets |
63,507 |
|
68,234 |
|
|
Customer financing, net |
2,909 |
|
3,358 |
|
|
Property, plant and equipment, net of accumulated
depreciation of $16,641 and $16,286 |
12,533 |
|
12,076 |
|
|
Goodwill |
5,128 |
|
5,126 |
|
|
Acquired intangible assets, net |
2,544 |
|
2,657 |
|
|
Deferred income taxes |
267 |
|
265 |
|
|
Investments |
1,312 |
|
1,284 |
|
|
Other assets, net of accumulated amortization of
$451 and $451 |
1,409 |
|
1,408 |
|
|
Total assets |
|
$89,609 |
|
|
$94,408 |
|
|
Liabilities and equity |
|
|
|
Accounts payable |
|
$11,748 |
|
|
$10,800 |
|
|
Accrued liabilities |
13,534 |
|
14,014 |
|
|
Advances and billings in excess of related
costs |
23,409 |
|
24,364 |
|
|
Short-term debt and current portion of long-term
debt |
1,168 |
|
1,234 |
|
|
Total current liabilities |
49,859 |
|
50,412 |
|
|
Deferred income taxes |
2,422 |
|
2,392 |
|
|
Accrued retiree health care |
6,586 |
|
6,616 |
|
|
Accrued pension plan liability, net |
18,200 |
|
17,783 |
|
|
Other long-term liabilities |
2,048 |
|
2,078 |
|
|
Long-term debt |
9,847 |
|
8,730 |
|
|
Shareholders' equity: |
|
|
|
Common stock, par value $5.00 – 1,200,000,000
shares authorized; 1,012,261,159 shares issued |
5,061 |
|
5,061 |
|
|
Additional paid-in capital |
4,778 |
|
4,834 |
|
|
Treasury stock, at cost - 386,402,793 and
345,637,354 shares |
(34,821) |
|
(29,568) |
|
|
Retained earnings |
38,362 |
|
38,756 |
|
|
Accumulated other comprehensive loss |
(12,795) |
|
(12,748) |
|
|
Total shareholders' equity |
585 |
|
6,335 |
|
|
Noncontrolling interests |
62 |
|
62 |
|
|
Total equity |
647 |
|
6,397 |
|
|
Total liabilities and equity |
|
$89,609 |
|
|
$94,408 |
|
|
The
Boeing Company and Subsidiaries |
Consolidated Statements of Cash Flows |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Six
months ended
June 30 |
(Dollars in millions) |
2016 |
|
2015 |
|
|
Cash flows – operating
activities: |
|
|
|
Net earnings/(loss) |
|
$985 |
|
|
$2,446 |
|
|
Adjustments to reconcile net earnings to net cash
provided by operating activities: |
|
|
|
Non-cash items – |
|
|
|
Share-based plans expense |
97 |
|
94 |
|
|
Depreciation and amortization |
890 |
|
912 |
|
|
Investment/asset impairment charges, net |
50 |
|
74 |
|
|
Customer financing valuation benefit |
(4) |
|
(5) |
|
|
Gain/(loss) on dispositions, net |
9 |
|
(1) |
|
|
Other charges and credits, net |
141 |
|
140 |
|
|
Excess tax benefits from share-based payment
arrangements |
|
|
(124) |
|
|
Changes in assets and liabilities – |
|
|
|
Accounts receivable |
(503) |
|
(313) |
|
|
Inventories, net of advances and progress
billings |
3,004 |
|
(2,395) |
|
|
Accounts payable |
1,221 |
|
888 |
|
|
Accrued liabilities |
(269) |
|
(177) |
|
|
Advances and billings in excess of related
costs |
(954) |
|
195 |
|
|
Income taxes receivable, payable and deferred |
(494) |
|
482 |
|
|
Other long-term liabilities |
(103) |
|
(17) |
|
|
Pension and other postretirement plans |
181 |
|
1,244 |
|
|
Customer financing, net |
275 |
|
19 |
|
|
Other |
(61) |
|
(77) |
|
|
Net cash provided by operating
activities |
4,465 |
|
3,385 |
|
|
Cash flows – investing activities: |
|
|
|
Property, plant and equipment additions |
(1,419) |
|
(1,266) |
|
|
Property, plant and equipment reductions |
13 |
|
20 |
|
|
Acquisitions, net of cash acquired |
|
|
(23) |
|
|
Contributions to investments |
(657) |
|
(1,205) |
|
|
Proceeds from investments |
705 |
|
2,040 |
|
|
Other |
8 |
|
22 |
|
|
Net cash used by investing
activities |
(1,350) |
|
(412) |
|
|
Cash flows – financing activities: |
|
|
|
New borrowings |
1,323 |
|
761 |
|
|
Debt repayments |
(267) |
|
(846) |
|
|
Stock options exercised |
147 |
|
276 |
|
|
Excess tax benefits from share-based payment
arrangements |
|
|
124 |
|
|
Employee taxes on certain share-based payment
arrangements |
(79) |
|
(90) |
|
|
Common shares repurchased |
(5,501) |
|
(4,501) |
|
|
Dividends paid |
(1,408) |
|
(1,264) |
|
|
Other |
(24) |
|
|
|
|
Net cash used by financing
activities |
(5,809) |
|
(5,540) |
|
|
Effect of exchange rate changes on cash and cash
equivalents |
(3) |
|
(9) |
|
|
Net decrease in cash and cash
equivalents |
(2,697) |
|
(2,576) |
|
|
Cash and cash equivalents at beginning of
year |
11,302 |
|
11,733 |
|
|
Cash and cash equivalents at end of
period |
|
$8,605 |
|
|
$9,157 |
|
|
The Boeing Company
and Subsidiaries |
Summary of Business
Segment Data |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six
months ended
June 30 |
Three months
ended
June 30 |
|
(Dollars in millions) |
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
Commercial Airplanes |
|
$31,855 |
|
|
$32,258 |
|
|
$17,456 |
|
|
$16,877 |
|
|
|
|
Defense, Space & Security: |
|
|
|
|
|
|
|
Boeing Military Aircraft |
6,638 |
|
6,200 |
|
2,979 |
|
3,474 |
|
|
|
|
Network & Space Systems |
3,545 |
|
3,670 |
|
1,810 |
|
1,938 |
|
|
|
|
Global Services & Support |
4,947 |
|
4,383 |
|
2,385 |
|
2,132 |
|
|
|
|
Total Defense, Space & Security |
15,130 |
|
14,253 |
|
7,174 |
|
7,544 |
|
|
|
|
Boeing Capital |
148 |
|
201 |
|
84 |
|
115 |
|
|
|
|
Unallocated items, eliminations and other |
254 |
|
(20) |
|
41 |
|
7 |
|
|
|
|
Total revenues |
|
$47,387 |
|
|
$46,692 |
|
|
$24,755 |
|
|
$24,543 |
|
|
|
|
Earnings/(loss) from operations: |
|
|
|
|
|
|
|
Commercial Airplanes |
|
$60 |
|
|
$2,823 |
|
|
($973) |
|
|
$1,206 |
|
|
|
|
Defense, Space & Security: |
|
|
|
|
|
|
|
Boeing Military Aircraft |
509 |
|
380 |
|
175 |
|
121 |
|
|
|
|
Network & Space Systems |
301 |
|
318 |
|
153 |
|
151 |
|
|
|
|
Global Services & Support |
605 |
|
591 |
|
265 |
|
274 |
|
|
|
|
Total Defense, Space & Security |
1,415 |
|
1,289 |
|
593 |
|
546 |
|
|
|
|
Boeing Capital |
23 |
|
31 |
|
18 |
|
11 |
|
|
|
|
Segment operating profit/(loss) |
1,498 |
|
4,143 |
|
(362) |
|
1,763 |
|
|
|
|
Unallocated items, eliminations and other |
(129) |
|
(441) |
|
(57) |
|
(80) |
|
|
|
|
Earnings/(loss) from operations |
1,369 |
|
3,702 |
|
(419) |
|
1,683 |
|
|
|
|
Other income, net |
39 |
|
3 |
|
13 |
|
15 |
|
|
|
|
Interest and debt expense |
(146) |
|
(136) |
|
(73) |
|
(75) |
|
|
|
|
Earnings/(loss) before income taxes |
1,262 |
|
3,569 |
|
(479) |
|
1,623 |
|
|
|
|
Income tax (expense)/benefit |
(277) |
|
(1,123) |
|
245 |
|
(513) |
|
|
|
|
Net earnings/(loss) |
|
$985 |
|
|
$2,446 |
|
|
($234) |
|
|
$1,110 |
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expense, net: |
|
|
|
|
|
|
|
Commercial Airplanes |
|
$2,548 |
|
|
$1,097 |
|
|
$1,877 |
|
|
$554 |
|
|
|
|
Defense, Space & Security |
521 |
|
474 |
|
263 |
|
250 |
|
|
|
|
Other |
(25) |
|
(2) |
|
(13) |
|
(4) |
|
|
|
|
Total research and development expense,
net |
|
$3,044 |
|
|
$1,569 |
|
|
$2,127 |
|
|
$800 |
|
|
|
|
|
|
|
|
|
|
|
|
Unallocated items, eliminations and
other: |
|
|
|
|
|
|
|
Share-based plans |
|
($41) |
|
|
($37) |
|
|
($18) |
|
|
($16) |
|
|
|
|
Deferred compensation |
(5) |
|
(48) |
|
(21) |
|
10 |
|
|
|
|
Amortization of previously capitalized
interest |
(48) |
|
(49) |
|
(18) |
|
(20) |
|
|
|
|
Eliminations and other unallocated items |
(198) |
|
(164) |
|
(69) |
|
(24) |
|
|
|
|
Sub-total (included in core operating
earnings) |
(292) |
|
(298) |
|
(126) |
|
(50) |
|
|
|
|
Pension |
79 |
|
(209) |
|
34 |
|
(57) |
|
|
|
|
Postretirement |
84 |
|
66 |
|
35 |
|
27 |
|
|
|
|
Total unallocated items, eliminations and
other |
|
($129) |
|
|
($441) |
|
|
($57) |
|
|
($80) |
|
|
|
|
The
Boeing Company and Subsidiaries |
Operating and Financial Data |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deliveries |
|
Six
months ended
June 30 |
Three months ended
June 30 |
|
|
|
|
|
|
|
|
Commercial Airplanes |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
737 |
|
248 |
|
249 |
|
127 |
|
128 |
|
|
|
|
|
|
|
|
|
|
|
747 |
|
3 |
|
9 |
|
2 |
|
5 |
|
|
|
|
|
|
|
|
|
|
|
767 |
|
5 |
|
9 |
|
4 |
|
4 |
|
|
|
|
|
|
|
|
|
|
|
777 |
|
51 |
|
50 |
|
28 |
|
26 |
|
|
|
|
|
|
|
|
|
|
|
787 |
|
68 |
|
64 |
|
38 |
|
34 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
375 |
|
381 |
|
199 |
|
197 |
|
|
|
|
|
|
|
|
|
|
|
Note: Deliveries under operating
lease are identified by parentheses. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defense, Space & Security |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Boeing Military Aircraft |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AH-64 Apache (New) |
|
15 |
|
12 |
|
8 |
|
6 |
|
|
|
|
|
|
|
|
|
|
|
AH-64 Apache (Remanufactured) |
|
18 |
|
23 |
|
7 |
|
13 |
|
|
|
|
|
|
|
|
|
|
|
C-17 Globemaster III |
|
4 |
|
3 |
|
1 |
|
2 |
|
|
|
|
|
|
|
|
|
|
|
CH-47 Chinook (New) |
|
10 |
|
21 |
|
7 |
|
15 |
|
|
|
|
|
|
|
|
|
|
|
CH-47 Chinook (Renewed) |
|
16 |
|
5 |
|
7 |
|
1 |
|
|
|
|
|
|
|
|
|
|
|
F-15 Models |
|
7 |
|
5 |
|
3 |
|
4 |
|
|
|
|
|
|
|
|
|
|
|
F/A-18 Models |
|
14 |
|
20 |
|
6 |
|
9 |
|
|
|
|
|
|
|
|
|
|
|
P-8 Models |
|
9 |
|
6 |
|
5 |
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Services & Support |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AEW&C |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C-40A |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Network & Space Systems |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and Civil Satellites |
|
1 |
|
1 |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
Military Satellites |
|
1 |
|
1 |
|
1 |
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractual backlog (Dollars in
billions) |
|
|
|
June 30
2016 |
|
December 31
2015 |
|
Commercial Airplanes |
|
|
|
|
$416.6 |
|
|
$431.4 |
|
Defense, Space & Security: |
|
|
|
|
|
Boeing Military Aircraft |
|
|
|
22.6 |
|
19.9 |
|
Network & Space Systems |
|
|
|
6.9 |
|
7.4 |
|
Global Services & Support |
|
|
|
16.9 |
|
17.9 |
|
Total Defense, Space & Security |
|
|
|
46.4 |
|
45.2 |
|
Total contractual backlog |
|
|
|
|
$463.0 |
|
|
$476.6 |
|
Unobligated backlog |
|
|
|
|
$9.2 |
|
|
$12.7 |
|
Total backlog |
|
|
|
|
$472.2 |
|
|
$489.3 |
|
Workforce |
|
|
|
158,100 |
|
161,400 |
|
|
|
|
The
Boeing Company and Subsidiaries |
Reconciliation of Non-GAAP Measures |
(Unaudited) |
|
The tables provided below reconcile
the non-GAAP financial measures core operating earnings, core
operating margin, core earnings per share, and Commercial Airplanes
operating margin excluding the reclassification and charges with
the most directly comparable GAAP financial measures, earnings from
operations, operating margin, diluted earnings per share and
Commercial Airplanes operating margin. See page 7 of this release
for additional information on the use of these non-GAAP financial
measures. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in millions, except per share
data) |
Second Quarter |
First Half |
Guidance |
|
|
|
|
2016 |
2015 |
2016 |
2015 |
2016 |
|
|
|
|
Revenues |
|
$24,755 |
|
|
$24,543 |
|
|
$47,387 |
|
|
$46,692 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Earnings/(Loss) From Operations |
|
($419) |
|
|
$1,683 |
|
|
$1,369 |
|
|
$3,702 |
|
|
|
|
|
|
Increase/(Decrease) in GAAP Earnings From
Operations |
(125%) |
|
|
|
(63%) |
|
|
|
|
|
|
|
|
GAAP Operating Margin |
(1.7%) |
|
6.9% |
|
2.9% |
|
7.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unallocated Pension (Income)/Expense |
|
($34) |
|
|
$57 |
|
|
($79) |
|
|
$209 |
|
|
|
|
|
|
Unallocated Other Postretirement Benefit
Income |
|
($35) |
|
|
($27) |
|
|
($84) |
|
|
($66) |
|
|
|
|
|
|
Unallocated Pension and Other Postretirement
Benefit (Income)/Expense |
|
($69) |
|
|
$30 |
|
|
($163) |
|
|
$143 |
|
~($300) |
|
|
|
|
Core Operating Earnings/(Loss)
(non-GAAP) |
|
($488) |
|
|
$1,713 |
|
|
$1,206 |
|
|
$3,845 |
|
|
|
|
|
|
Increase/(Decrease) in Core Operating Earnings
(non-GAAP) |
(128%) |
|
|
|
(69%) |
|
|
|
|
|
|
|
|
Core Operating Margin (non-GAAP) |
(2.0%) |
|
7.0% |
|
2.5% |
|
8.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted Earnings/(Loss) Per Share |
|
($0.37) |
|
|
$1.59 |
|
|
$1.51 |
|
|
$3.46 |
|
$6.40 -
$6.60 |
|
|
|
|
Unallocated Pension (Income)/Expense |
|
($0.05) |
|
|
$0.09 |
|
|
($0.12) |
|
|
$0.29 |
|
|
|
|
|
|
Unallocated Postretirement Benefit
(Income)/Expense |
|
($0.06) |
|
|
($0.04) |
|
|
($0.13) |
|
|
($0.09) |
|
($0.30) |
|
|
|
|
Provision for deferred income taxes on
adjustments (1) |
|
$0.04 |
|
|
($0.02) |
|
|
$0.09 |
|
|
($0.07) |
|
|
|
|
|
|
Core Earnings/(Loss) Per Share
(non-GAAP) |
|
($0.44) |
|
|
$1.62 |
|
|
$1.35 |
|
|
$3.59 |
|
$6.10 -
$6.30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Diluted Shares
(millions) |
636.3 |
** |
698.9 |
|
654.9 |
|
706.6 |
|
645 - 650 |
|
|
|
|
Increase/(Decrease) in GAAP Earnings Per
Share |
(123%) |
|
|
(56%) |
|
|
|
|
|
|
|
Increase/(Decrease) in Core Earnings Per Share
(non-GAAP) |
(127%) |
|
|
(62%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Airplanes Revenues |
|
$17,456 |
|
|
|
|
|
|
|
|
|
GAAP Commercial Airplanes Earnings/(Loss) from
Operations |
|
($973) |
|
|
|
|
|
|
|
|
|
GAAP Commercial Airplanes Operating
margin |
(5.6%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost reclassification of two 787 flight test
aircraft |
|
$1,235 |
|
|
|
|
|
|
|
|
|
Reach-forward loss on 747 program |
|
$1,188 |
|
|
|
|
|
|
|
|
|
Reach-forward loss at Commercial Airplanes on
KC-46 Tanker program |
|
$354 |
|
|
|
|
|
|
|
|
|
Commercial Airlines Earnings from Operations
excluding the reclassification and charges (non-GAAP) |
|
$1,804 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Airplanes operating margin excluding
the reclassification and charges (non-GAAP) |
10.3% |
|
|
|
|
|
|
|
|
|
|
|
(1) |
The income tax impact is calculated using the tax
rate in effect for the non-GAAP adjustments. |
** |
As a result of incurring a net loss for the three
months ended June 30, 2016, potential common shares of 6.7 million
were excluded from diluted earnings per share. |
SOURCE: Boeing