Boeing
Reports Third-Quarter Results and Raises Full Year Guidance
CHICAGO, Oct. 26, 2016 --
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Strong operating cash flow of $3.2
billion; repurchased 7.6 million shares for $1.0 billion
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GAAP EPS of $3.60 and core EPS
(non-GAAP)* of $3.51 on solid
execution and tax items
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Revenue of $23.9 billion on
timing of aircraft deliveries
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Backlog remains robust at $462
billion with more than 5,600 commercial airplane
orders
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Cash and marketable securities of $9.7
billion provide strong liquidity
-
2016 revenue guidance increased $500
million on higher deliveries
-
2016 GAAP EPS and core EPS (non-GAAP)* guidance
increased $0.70for
additionaltaxadjustment
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Table 1. Summary Financial
Results |
|
Third
Quarter |
|
Nine months |
|
(Dollars in Millions, except per share
data) |
|
2016 |
2015 |
Change |
2016 |
2015 |
Change |
|
|
|
|
|
|
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Revenues |
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$23,898 |
|
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$25,849 |
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(8)% |
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$71,285 |
|
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$72,541 |
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(2)% |
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GAAP |
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Earnings From Operations |
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$2,282 |
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$2,580 |
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(12)% |
|
|
$3,651 |
|
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$6,282 |
|
(42)% |
|
Operating Margin |
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9.5% |
|
10.0% |
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(0.5)
Pts |
|
5.1% |
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8.7% |
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(3.6)
Pts |
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Net Earnings |
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$2,279 |
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$1,704 |
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34% |
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$3,264 |
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$4,150 |
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(21)% |
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Earnings Per Share |
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$3.60 |
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$2.47 |
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46% |
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$5.04 |
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$5.92 |
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(15)% |
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Operating Cash Flow |
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$3,202 |
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$2,859 |
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12% |
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$7,667 |
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$6,244 |
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23% |
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Non-GAAP* |
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Core Operating Earnings |
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$2,194 |
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$2,637 |
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(17)% |
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$3,400 |
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$6,482 |
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(48)% |
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Core Operating Margin |
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9.2% |
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10.2% |
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(1.0)
Pts |
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4.8% |
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8.9% |
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(4.1)
Pts |
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Core Earnings Per Share |
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$3.51 |
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$2.52 |
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39% |
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$4.79 |
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$6.11 |
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(22)% |
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* Non-GAAP measures. Complete definitions of
Boeing's non-GAAP measures are on page 6, "Non-GAAP Measures
Disclosures." |
The Boeing Company [NYSE: BA] reported third-quarter GAAP
earnings per share of $3.60 and core
earnings per share (non-GAAP)* of $3.51 reflecting overall solid execution on
production programs and services, favorable tax items ($0.98 per share), and timing of aircraft
deliveries (Table 1).
Revenue guidance has been increased $500
million to between $93.5 and $95.5
billion on higher commercial deliveries. GAAP earnings per
share guidance for 2016 has been increased to between $7.10 and $7.30 from $6.40
and $6.60 and core earnings per share (non-GAAP)* guidance
has been increased to between $6.80 and
$7.00 from $6.10 and $6.30 to
reflect a favorable $0.70 per share
tax basis adjustment. The third quarter favorable tax adjustment
for a 2011-2012 tax settlement of $0.28 per share was previously announced in the
second quarter of 2016 and was reflected in prior guidance.
"Solid operating performance across our commercial and defense
and space businesses in the third quarter again generated strong
cash flow for Boeing, which continues to fuel investments in our
future and enable us to deliver compelling returns to our
shareholders," said Chairman, President and Chief Executive Officer
Dennis Muilenburg. "We also captured
key orders, reinforcing the strength of our large and diverse order
backlog."
"We achieved key milestones on the 737 MAX, 787-10 and other
development programs, including the first KC-46 production
contracts. Our teams remain focused on completing these development
efforts and delivering better capabilities and economics to
customers around the world."
"We remain on track to deliver on our full-year commitments. At
the same time, we are positioning Boeing for further growth through
our intense focus on productivity, quality and safety across the
company."
Table 2. Cash Flow |
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Third
Quarter |
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Nine months |
(Millions) |
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2016 |
2015 |
2016 |
2015 |
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Operating Cash Flow |
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$3,202 |
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$2,859 |
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$7,667 |
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$6,244 |
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Less Additions to Property, Plant & Equipment |
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($595) |
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($561) |
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($2,014) |
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($1,827) |
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Free Cash Flow* |
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$2,607 |
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$2,298 |
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$5,653 |
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$4,417 |
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* Non-GAAP measures. Complete definitions of
Boeing's non-GAAP measures are on page 6, "Non-GAAP Measures
Disclosures." |
Operating cash flow in the quarter was $3.2 billion, reflecting solid operating
performance (Table 2). During the quarter, the company repurchased
7.6 million shares for $1.0 billion,
leaving $7.5 billion remaining under
the current repurchase authorization. The company also paid
$0.7 billion in dividends in the
quarter, reflecting an approximately 20 percent increase in
dividends per share compared to the same period of the prior
year.
Table 3. Cash, Marketable Securities and Debt
Balances |
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Quarter-End |
(Billions) |
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Q3 16 |
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Q2 16 |
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Cash |
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$9.0 |
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$8.6 |
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Marketable Securities1 |
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$0.7 |
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$0.7 |
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Total |
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$9.7 |
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$9.3 |
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Debt Balances: |
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The Boeing Company, net of intercompany loans to
BCC |
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$8.1 |
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$8.7 |
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Boeing Capital, including intercompany loans |
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$2.4 |
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$2.3 |
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Total Consolidated Debt |
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$10.5 |
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$11.0 |
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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
$9.7 billion, up from $9.3 billion at the beginning of the quarter.
Debt was $10.5 billion, down from the
beginning of the quarter, due to repayment of debt (Table 3).
Total company backlog at quarter-end was $462 billion, down from $472 billion at the beginning of the quarter, and
included net orders for the quarter of $15
billion.
Segment Results
Commercial Airplanes
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Table 4. Commercial Airplanes |
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Third
Quarter |
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Nine months |
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(Dollars in Millions) |
|
2016 |
2015 |
Change |
2016 |
2015 |
Change |
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Commercial Airplanes Deliveries |
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188 |
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199 |
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(6)% |
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563 |
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580 |
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(3)% |
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Revenues |
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$16,973 |
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$17,692 |
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(4)% |
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$48,828 |
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$49,950 |
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(2)% |
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Earnings from Operations |
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$1,597 |
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$1,768 |
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(10)% |
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$1,657 |
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$4,591 |
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(64)% |
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Operating Margin |
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9.4% |
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10.0% |
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(0.6) Pts |
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3.4% |
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9.2% |
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(5.8) Pts |
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Commercial Airplanes third-quarter revenue decreased to
$17.0 billion on lower planned
delivery volume (Table 4). Third-quarter operating margin was 9.4
percent, reflecting delivery volume and mix, partially offset by
lower period costs.
During the quarter, we began production of the 500th 787
Dreamliner, completed service ready validation of the 737 MAX 8,
and began production of the 737 MAX 9. The 737 program has captured
more than 3,300 orders for the 737 MAX since launch and the company
remains on track to raise the production rate to 47 per month in
the third quarter of 2017. During the quarter, we continued to grow
our services business through an agreement with Japan Airlines to
provide spare parts solutions.
Commercial Airplanes booked 107 net orders during the quarter.
Backlog remains strong with more than 5,600 airplanes valued at
$409 billion.
Defense, Space & Security
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Table 5. Defense, Space & Security |
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Third
Quarter |
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Nine months |
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(Dollars in Millions) |
|
2016 |
2015 |
Change |
2016 |
2015 |
Change |
Revenues1 |
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Boeing Military Aircraft |
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$3,260 |
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$4,037 |
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(19)% |
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$9,898 |
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$10,237 |
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(3)% |
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Network & Space Systems |
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$1,701 |
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$2,127 |
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(20)% |
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$5,246 |
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$5,797 |
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(10)% |
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Global Services & Support |
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$2,547 |
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$2,186 |
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17% |
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$7,494 |
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$6,569 |
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14% |
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Total BDS Revenues |
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$7,508 |
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$8,350 |
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(10)% |
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$22,638 |
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$22,603 |
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— |
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Earnings from
Operations1 |
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Boeing Military Aircraft |
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$434 |
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$494 |
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(12)% |
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$943 |
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$874 |
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8% |
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Network & Space Systems |
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$35 |
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$245 |
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(86)% |
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$336 |
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$563 |
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(40)% |
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Global Services & Support |
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$315 |
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$283 |
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11% |
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$920 |
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$874 |
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5% |
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Total BDS Earnings from Operations |
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$784 |
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$1,022 |
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(23)% |
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$2,199 |
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$2,311 |
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(5)% |
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Operating Margin |
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10.4% |
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12.2% |
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(1.8) Pts |
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9.7% |
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10.2% |
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(0.5) 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 third-quarter revenue was
$7.5 billion. Third-quarter operating
margin was 10.4 percent, reflecting solid execution and the impact
of the Commercial Crew program (Table 5).
Boeing Military Aircraft (BMA) third-quarter revenue was
$3.3 billion, reflecting fewer C-17
deliveries and volume on F-15. Operating margin increased to 13.3
percent, reflecting program mix. During the quarter, BMA was
awarded a contract from the U.S. Air Force for low-rate initial
production of 19 KC-46 Tanker aircraft and received an agreement
from the U.K. Ministry of Defence to purchase 50 Apache attack
helicopters and nine P-8 Poseidon aircraft.
Network & Space Systems (N&SS) third-quarter revenue
decreased to $1.7 billion with an
operating margin of 2.1 percent, primarily reflecting the charge on
the Commercial Crew development program. The charge includes a
$124 million reversal of cumulative
pre-tax earnings recorded in prior periods and a $38 million pre-tax reach-forward loss, and was
largely driven by delays in completion of engineering and supply
chain activities. During the quarter, N&SS announced an award
for a 702MP satellite with a new digital payload offering twice the
capacity of previous designs.
Global Services & Support (GS&S) third-quarter revenue
increased to $2.5 billion, reflecting
higher volume in Aircraft Modernization & Sustainment and
Training Systems & Government Services. Operating margin was
12.4 percent largely reflecting contract mix. During the
quarter, GS&S was awarded contracts from the Defense Logistics
Agency for F/A-18 spare parts.
Backlog at Defense, Space & Security was $53 billion, of which 38 percent represents
orders from international customers.
Additional Financial Information
Table 6. Additional Financial Information |
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Third
Quarter |
Nine months |
(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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$63 |
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$114 |
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$211 |
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$315 |
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Unallocated items, eliminations and other |
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($646) |
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($307) |
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($392) |
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($327) |
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Earnings from Operations |
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|
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Boeing Capital |
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$13 |
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$10 |
|
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$36 |
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$41 |
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Unallocated pension/postretirement |
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$88 |
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($57) |
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$251 |
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($200) |
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Other unallocated items and eliminations |
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($200) |
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($163) |
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($492) |
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($461) |
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Other income/(loss), net |
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$2 |
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($26) |
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$41 |
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($23) |
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Interest and debt expense |
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($81) |
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($67) |
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($227) |
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($203) |
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Effective tax rate |
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(3.4)% |
|
31.5% |
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5.8% |
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31.5% |
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At quarter-end, Boeing Capital's net portfolio balance was
$3.7 billion, up from the beginning
of the quarter. Total pension expense for the third quarter was
$453 million, down from $529 million in the same period of the prior
year. Other unallocated items and eliminations revenue decreased
from the same period in the prior year primarily due to the
elimination of intercompany revenue for three aircraft delivered
under operating leases. The effective tax rate for the third
quarter decreased from the same period in the prior year primarily
due to the favorable $440 million tax
basis adjustment and the previously announced $177 million for the 2011-2012 tax
settlement.
Outlook
The company's 2016 updated financial and delivery guidance
(Table 7) reflects higher commercial deliveries and the impact of
the tax basis adjustment.
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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 |
$93.5 - 95.5 |
|
$93.0 - 95.0 |
GAAP Earnings Per Share |
$7.10 - 7.30 |
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$6.40 - 6.60 |
Core Earnings Per Share* |
$6.80 - 7.00 |
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$6.10 - 6.30 |
Operating Cash Flow |
~$10.0 |
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~$10.0 |
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Commercial Airplanes |
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Deliveries |
745 - 750 |
|
740 - 745 |
Revenue |
$64.5 - 65.5 |
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$64.0 - 65.0 |
Operating Margin |
4.5% - 5.0 |
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4.5% - 5.0 |
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Defense, Space & Security |
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Revenue |
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Boeing Military Aircraft |
~$12.4 |
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~$12.3 |
Network & Space Systems |
~$7.0 |
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~$7.3 |
Global Services & Support |
~$9.6 |
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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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~9.5% |
Network & Space Systems |
~7.5% |
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~9.0% |
Global Services & Support |
~12.5% |
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~12.0% |
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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 |
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Stable |
Revenue |
~$0.3 |
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~$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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~ $4.8 |
Capital Expenditures |
~ $2.8 |
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~ $2.8 |
Pension Expense 1 |
~ $2.1 |
|
~ $2.1 |
Effective Tax Rate |
~ 14.0% |
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~ 23.0% |
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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 6,
"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, Core Operating Margin and Core Earnings
Per Share
Core operating earnings is defined as GAAP earnings from
operations excluding unallocated pension and post-retirement
expense. Core operating margin is defined as core operating
earnings expressed as a percentage of revenue. Core earnings per
share is defined as GAAP diluted earnings 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 13.
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: |
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Investor Relations: |
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Troy Lahr or Ben Hackman (312) 544-2140 |
Communications: |
|
Bernard Choi (312) 544-2002 |
The Boeing Company
and Subsidiaries |
Consolidated
Statements of Operations |
(Unaudited) |
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Nine
months ended
September 30 |
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Three months ended
September 30 |
(Dollars in millions, except per share
data) |
2016 |
|
2015 |
|
2016 |
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2015 |
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Sales of products |
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$63,563 |
|
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$64,408 |
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$21,494 |
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|
$23,000 |
|
Sales of services |
7,722 |
|
8,133 |
|
2,404 |
|
2,849 |
|
Total revenues |
71,285 |
|
72,541 |
|
23,898 |
|
25,849 |
|
|
|
|
|
|
Cost of products |
(55,117) |
|
(55,020) |
|
(17,907) |
|
(19,393) |
|
Cost of services |
(6,163) |
|
(6,377) |
|
(1,983) |
|
(2,191) |
|
Boeing Capital interest expense |
(46) |
|
(49) |
|
(14) |
|
(16) |
|
Total costs and expenses |
(61,326) |
|
(61,446) |
|
(19,904) |
|
(21,600) |
|
|
9,959 |
|
11,095 |
|
3,994 |
|
4,249 |
|
Income from operating investments, net |
220 |
|
207 |
|
69 |
|
78 |
|
General and administrative expense |
(2,617) |
|
(2,594) |
|
(923) |
|
(889) |
|
Research and development expense, net |
(3,901) |
|
(2,426) |
|
(857) |
|
(857) |
|
(Loss)/gain on dispositions, net |
(10) |
|
|
|
(1) |
|
(1) |
|
Earnings from operations |
3,651 |
|
6,282 |
|
2,282 |
|
2,580 |
|
Other income/(loss), net |
41 |
|
(23) |
|
2 |
|
(26) |
|
Interest and debt expense |
(227) |
|
(203) |
|
(81) |
|
(67) |
|
Earnings before income taxes |
3,465 |
|
6,056 |
|
2,203 |
|
2,487 |
|
Income tax (expense)/benefit |
(201) |
|
(1,906) |
|
76 |
|
(783) |
|
Net earnings |
|
$3,264 |
|
|
$4,150 |
|
|
$2,279 |
|
|
$1,704 |
|
|
|
|
|
|
Basic earnings per share |
|
$5.09 |
|
|
$5.99 |
|
|
$3.64 |
|
|
$2.50 |
|
|
|
|
|
|
Diluted earnings per share |
|
$5.04 |
|
|
$5.92 |
|
|
$3.60 |
|
|
$2.47 |
|
|
|
|
|
|
Cash dividends paid per share |
|
$3.27 |
|
|
$2.73 |
|
|
$1.09 |
|
|
$0.91 |
|
|
|
|
|
|
Weighted average diluted shares (millions) |
647.9 |
|
700.9 |
|
632.7 |
|
689.0 |
|
The Boeing Company
and Subsidiaries |
Consolidated
Statements of Financial Position |
(Unaudited) |
|
|
|
|
|
|
|
|
(Dollars in millions, except per share
data) |
September 30
2016 |
|
December 31
2015 |
|
Assets |
|
|
Cash and cash equivalents |
|
$8,986 |
|
|
$11,302 |
|
Short-term and other investments |
682 |
|
750 |
|
Accounts receivable, net |
9,524 |
|
8,713 |
|
Current portion of customer financing, net |
365 |
|
212 |
|
Inventories, net of advances and progress
billings |
42,680 |
|
47,257 |
|
Total current assets |
62,237 |
|
68,234 |
|
Customer financing, net |
3,401 |
|
3,358 |
|
Property, plant and equipment, net of accumulated
depreciation of $16,752 and $16,286 |
12,713 |
|
12,076 |
|
Goodwill |
5,128 |
|
5,126 |
|
Acquired intangible assets, net |
2,488 |
|
2,657 |
|
Deferred income taxes |
265 |
|
265 |
|
Investments |
1,303 |
|
1,284 |
|
Other assets, net of accumulated amortization of $470
and $451 |
1,415 |
|
1,408 |
|
Total assets |
|
$88,950 |
|
|
$94,408 |
|
Liabilities and equity |
|
|
Accounts payable |
|
$11,968 |
|
|
$10,800 |
|
Accrued liabilities |
13,243 |
|
14,014 |
|
Advances and billings in excess of related costs |
22,646 |
|
24,364 |
|
Short-term debt and current portion of long-term
debt |
632 |
|
1,234 |
|
Total current liabilities |
48,489 |
|
50,412 |
|
Deferred income taxes |
2,211 |
|
2,392 |
|
Accrued retiree health care |
6,544 |
|
6,616 |
|
Accrued pension plan liability, net |
18,003 |
|
17,783 |
|
Other long-term liabilities |
1,729 |
|
2,078 |
|
Long-term debt |
9,824 |
|
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 |
4,808 |
|
4,834 |
|
Treasury stock, at cost - 393,301,648 and 345,637,354
shares |
(35,763) |
|
(29,568) |
|
Retained earnings |
40,641 |
|
38,756 |
|
Accumulated other comprehensive loss |
(12,658) |
|
(12,748) |
|
Total shareholders' equity |
2,089 |
|
6,335 |
|
Noncontrolling interests |
61 |
|
62 |
|
Total equity |
2,150 |
|
6,397 |
|
Total liabilities and equity |
|
$88,950 |
|
|
$94,408 |
|
The Boeing Company
and Subsidiaries |
Consolidated
Statements of Cash Flows |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Nine
months ended
September 30 |
(Dollars in millions) |
2016 |
|
2015 |
|
Cash flows – operating
activities: |
|
|
Net earnings |
|
$3,264 |
|
|
$4,150 |
|
Adjustments to reconcile net earnings to net cash
provided by operating activities: |
|
|
Non-cash items – |
|
|
Share-based plans expense |
144 |
|
141 |
|
Depreciation and amortization |
1,364 |
|
1,349 |
|
Investment/asset impairment charges, net |
61 |
|
124 |
|
Customer financing valuation benefit |
(5) |
|
(3) |
|
Loss on dispositions, net |
10 |
|
|
|
Other charges and credits, net |
219 |
|
230 |
|
Excess tax benefits from share-based payment
arrangements |
|
|
(139) |
|
Changes in assets and liabilities – |
|
|
Accounts receivable |
(517) |
|
(1,202) |
|
Inventories, net of advances and progress
billings |
4,334 |
|
(2,186) |
|
Accounts payable |
1,366 |
|
1,058 |
|
Accrued liabilities |
82 |
|
(196) |
|
Advances and billings in excess of related costs |
(1,717) |
|
270 |
|
Income taxes receivable, payable and deferred |
(725) |
|
824 |
|
Other long-term liabilities |
(67) |
|
40 |
|
Pension and other postretirement plans |
144 |
|
1,837 |
|
Customer financing, net |
(195) |
|
45 |
|
Other |
(95) |
|
(98) |
|
Net cash provided by operating activities |
7,667 |
|
6,244 |
|
Cash flows – investing activities: |
|
|
Property, plant and equipment additions |
(2,014) |
|
(1,827) |
|
Property, plant and equipment reductions |
14 |
|
24 |
|
Acquisitions, net of cash acquired |
|
|
(23) |
|
Contributions to investments |
(928) |
|
(1,341) |
|
Proceeds from investments |
956 |
|
2,169 |
|
Other |
8 |
|
33 |
|
Net cash used by investing activities |
(1,964) |
|
(965) |
|
Cash flows – financing activities: |
|
|
New borrowings |
1,323 |
|
761 |
|
Debt repayments |
(836) |
|
(864) |
|
Stock options exercised |
192 |
|
331 |
|
Excess tax benefits from share-based payment
arrangements |
|
|
139 |
|
Employee taxes on certain share-based payment
arrangements |
(83) |
|
(93) |
|
Common shares repurchased |
(6,501) |
|
(6,001) |
|
Dividends paid |
(2,084) |
|
(1,882) |
|
Other |
(24) |
|
|
|
Net cash used by financing activities |
(8,013) |
|
(7,609) |
|
Effect of exchange rate changes on cash and cash
equivalents |
(6) |
|
(20) |
|
Net decrease in cash and cash equivalents |
(2,316) |
|
(2,350) |
|
Cash and cash equivalents at beginning of year |
11,302 |
|
11,733 |
|
Cash and cash equivalents at end of period |
|
$8,986 |
|
|
$9,383 |
|
The Boeing Company
and Subsidiaries |
Summary of Business
Segment Data |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine
months ended
September 30 |
|
Three months ended
September 30 |
(Dollars in millions) |
2016 |
|
2015 |
|
2016 |
|
2015 |
|
Revenues: |
|
|
|
|
Commercial Airplanes |
|
$48,828 |
|
|
$49,950 |
|
|
$16,973 |
|
|
$17,692 |
|
Defense, Space & Security: |
|
|
|
|
Boeing Military Aircraft |
9,898 |
|
10,237 |
|
3,260 |
|
4,037 |
|
Network & Space Systems |
5,246 |
|
5,797 |
|
1,701 |
|
2,127 |
|
Global Services & Support |
7,494 |
|
6,569 |
|
2,547 |
|
2,186 |
|
Total Defense, Space & Security |
22,638 |
|
22,603 |
|
7,508 |
|
8,350 |
|
Boeing Capital |
211 |
|
315 |
|
63 |
|
114 |
|
Unallocated items, eliminations and other |
(392) |
|
(327) |
|
(646) |
|
(307) |
|
Total revenues |
|
$71,285 |
|
|
$72,541 |
|
|
$23,898 |
|
|
$25,849 |
|
Earnings from operations: |
|
|
|
|
Commercial Airplanes |
|
$1,657 |
|
|
$4,591 |
|
|
$1,597 |
|
|
$1,768 |
|
Defense, Space & Security: |
|
|
|
|
Boeing Military Aircraft |
943 |
|
874 |
|
434 |
|
494 |
|
Network & Space Systems |
336 |
|
563 |
|
35 |
|
245 |
|
Global Services & Support |
920 |
|
874 |
|
315 |
|
283 |
|
Total Defense, Space & Security |
2,199 |
|
2,311 |
|
784 |
|
1,022 |
|
Boeing Capital |
36 |
|
41 |
|
13 |
|
10 |
|
Segment operating profit |
3,892 |
|
6,943 |
|
2,394 |
|
2,800 |
|
Unallocated items, eliminations and other |
(241) |
|
(661) |
|
(112) |
|
(220) |
|
Earnings from operations |
3,651 |
|
6,282 |
|
2,282 |
|
2,580 |
|
Other income/(loss), net |
41 |
|
(23) |
|
2 |
|
(26) |
|
Interest and debt expense |
(227) |
|
(203) |
|
(81) |
|
(67) |
|
Earnings before income taxes |
3,465 |
|
6,056 |
|
2,203 |
|
2,487 |
|
Income tax (expense)/benefit |
(201) |
|
(1,906) |
|
76 |
|
(783) |
|
Net earnings |
|
$3,264 |
|
|
$4,150 |
|
|
$2,279 |
|
|
$1,704 |
|
|
|
|
|
|
Research and development expense, net: |
|
|
|
|
Commercial Airplanes |
|
$3,194 |
|
|
$1,713 |
|
|
$646 |
|
|
$616 |
|
Defense, Space & Security |
750 |
|
715 |
|
229 |
|
241 |
|
Other |
(43) |
|
(2) |
|
(18) |
|
|
|
Total research and development expense,
net |
|
$3,901 |
|
|
$2,426 |
|
|
$857 |
|
|
$857 |
|
|
|
|
|
|
Unallocated items, eliminations and other |
|
|
|
|
Share-based plans |
|
($50) |
|
|
($57) |
|
|
($9) |
|
|
($20) |
|
Deferred compensation |
(38) |
|
(10) |
|
(33) |
|
38 |
|
Amortization of previously capitalized interest |
(71) |
|
(70) |
|
(23) |
|
(21) |
|
Eliminations and other unallocated items |
(333) |
|
(324) |
|
(135) |
|
(160) |
|
Sub-total (included in core operating
earnings) |
(492) |
|
(461) |
|
(200) |
|
(163) |
|
Pension |
129 |
|
(293) |
|
50 |
|
(84) |
|
Postretirement |
122 |
|
93 |
|
38 |
|
27 |
|
Total unallocated items, eliminations and
other |
|
($241) |
|
|
($661) |
|
|
($112) |
|
|
($220) |
|
The Boeing Company
and Subsidiaries |
Operating and
Financial Data |
(Unaudited) |
|
|
Deliveries |
|
Nine months
ended
September 30 |
Three months
ended
September 30 |
Commercial Airplanes |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
737 |
|
368 |
|
375 |
|
120 |
|
126 |
|
747 |
|
8 |
(3) |
13 |
(1) |
5 |
(3) |
4 |
(1) |
767 |
|
10 |
|
14 |
|
5 |
|
5 |
|
777 |
|
73 |
|
77 |
|
22 |
|
27 |
|
787 |
|
104 |
|
101 |
|
36 |
|
37 |
|
Total |
|
563 |
|
580 |
|
188 |
|
199 |
|
Note: Deliveries under operating lease
are identified by parentheses. |
|
|
|
|
|
|
Defense, Space & Security |
|
|
|
|
|
Boeing Military Aircraft |
|
|
|
|
|
AH-64 Apache (New) |
|
25 |
|
18 |
|
10 |
|
6 |
|
AH-64 Apache (Remanufactured) |
|
27 |
|
33 |
|
9 |
|
10 |
|
C-17 Globemaster III |
|
4 |
|
5 |
|
|
|
2 |
|
CH-47 Chinook (New) |
|
17 |
|
35 |
|
7 |
|
14 |
|
CH-47 Chinook (Renewed) |
|
23 |
|
6 |
|
7 |
|
1 |
|
F-15 Models |
|
11 |
|
8 |
|
4 |
|
3 |
|
F/A-18 Models |
|
20 |
|
28 |
|
6 |
|
8 |
|
P-8 Models |
|
13 |
|
10 |
|
4 |
|
4 |
|
|
|
|
|
|
|
Global Services & Support |
|
|
|
|
|
C-40A |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
Network & Space Systems |
|
|
|
|
|
Commercial and Civil Satellites |
|
3 |
|
1 |
|
2 |
|
|
Military Satellites |
|
2 |
|
1 |
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractual backlog (Dollars
in billions) |
|
|
|
September 30
2016 |
|
December 31
2015 |
|
Commercial Airplanes |
|
|
|
$408.8 |
|
$431.4 |
|
Defense, Space & Security: |
|
|
|
|
|
|
Boeing Military Aircraft |
|
|
|
20.8 |
|
19.9 |
|
Network & Space Systems |
|
|
|
6.5 |
|
7.4 |
|
Global Services & Support |
|
|
|
12.8 |
|
17.9 |
|
Total Defense, Space &
Security |
|
|
|
40.1 |
|
45.2 |
|
Total contractual backlog |
|
|
|
$448.9 |
|
$476.6 |
|
Unobligated backlog |
|
|
|
$13.1 |
|
$12.7 |
|
Total backlog |
|
|
|
$462.0 |
|
$489.3 |
|
Workforce |
|
|
|
154,700 |
|
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, and core
earnings per share with the most directly comparable GAAP financial
measures, earnings from operations, operating margin, and diluted
earnings per share. See page 6 of this release for additional
information on the use of these non-GAAP financial measures.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in millions, except per share
data) |
Third
Quarter |
|
Nine months |
|
Guidance |
|
2016 |
2015 |
2016 |
2015 |
2016 |
Revenues |
|
$23,898 |
|
|
$25,849 |
|
|
$71,285 |
|
|
$72,541 |
|
|
|
|
|
|
|
|
GAAP Earnings From Operations |
|
$2,282 |
|
|
$2,580 |
|
|
$3,651 |
|
|
$6,282 |
|
|
Increase/(Decrease) in GAAP Earnings From
Operations |
(12%) |
|
|
|
(42%) |
|
|
|
|
GAAP Operating Margin |
9.5% |
|
10.0% |
|
5.1% |
|
8.7% |
|
|
|
|
|
|
|
|
Unallocated Pension (Income)/Expense |
|
($50) |
|
|
$84 |
|
|
($129) |
|
|
$293 |
|
|
Unallocated Other Postretirement Benefit
Income |
|
($38) |
|
|
($27) |
|
|
($122) |
|
|
($93) |
|
|
Unallocated Pension and Other Postretirement
Benefit (Income)/Expense |
|
($88) |
|
|
$57 |
|
|
($251) |
|
|
$200 |
|
~($300) |
Core Operating Earnings (non-GAAP) |
|
$2,194 |
|
|
$2,637 |
|
|
$3,400 |
|
|
$6,482 |
|
|
Increase/(Decrease) in Core Operating Earnings
(non-GAAP) |
(17%) |
|
|
|
(48%) |
|
|
|
|
Core Operating Margin (non-GAAP) |
9.2% |
|
10.2% |
|
4.8% |
|
8.9% |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted Earnings Per Share |
|
$3.60 |
|
|
$2.47 |
|
|
$5.04 |
|
|
$5.92 |
|
$7.10 -
$7.30 |
Unallocated Pension (Income)/Expense |
|
($0.08) |
|
|
$0.12 |
|
|
($0.20) |
|
|
$0.42 |
|
|
Unallocated Postretirement Benefit
(Income)/Expense |
|
($0.06) |
|
|
($0.04) |
|
|
($0.19) |
|
|
($0.13) |
|
($0.30) |
Provision for deferred income taxes on
adjustments (1) |
|
$0.05 |
|
|
($0.03) |
|
|
$0.14 |
|
|
($0.10) |
|
|
Core Earnings Per Share (non-GAAP) |
|
$3.51 |
|
|
$2.52 |
|
|
$4.79 |
|
|
$6.11 |
|
$6.80 -
$7.00 |
|
|
|
|
|
|
Weighted Average Diluted Shares (millions) |
632.7 |
|
689.0 |
|
647.9 |
|
700.9 |
|
645 - 650 |
Increase/(Decrease) in GAAP Earnings Per
Share |
46% |
|
|
(15%) |
|
|
|
Increase/(Decrease) in Core Earnings Per Share
(non-GAAP) |
39% |
|
|
(22%) |
|
|
|
|
|
|
|
|
|
|
(1) The
income tax impact is calculated using the tax rate in effect for
the non-GAAP adjustments. |
SOURCE Boeing