Boeing Reports
Strong Second-Quarter Results; Raises EPS and Cash Flow
Guidance
CHICAGO, July 26, 2017
--
- GAAP EPS of $2.89 and core EPS
(non-GAAP)* of $2.55 on solid
execution across the company
- Strong operating cash flow of $5.0
billion; repurchased 13.6 million shares for $2.5 billion
- Revenue of $22.7 billion
reflecting 226 commercial and defense aircraft deliveries and
services
- Backlog grew to $482 billion,
including $27 billion of net orders
during the quarter
- Increased guidance for GAAP EPS $0.75 and core EPS (non-GAAP)* $0.60 on improved performance and tax
- Raised operating cash flow guidance by $1.5 billion and lowered capital expenditures
guidance by $300 million
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Table 1. Summary Financial Results |
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Second
Quarter |
First Half |
(Dollars in Millions, except per share
data) |
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2017 |
2016 |
2017 |
2016 |
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Revenues |
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$22,739 |
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$24,755 |
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$43,715 |
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$47,387 |
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GAAP |
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Earnings/(Loss) From Operations |
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$2,535 |
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($419) |
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$4,559 |
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$1,369 |
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Operating Margin |
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11.1% |
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(1.7)% |
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10.4% |
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2.9% |
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Net Earnings/(Loss) |
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$1,761 |
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($234) |
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$3,212 |
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$985 |
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Earnings/(Loss) Per Share |
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$2.89 |
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($0.37) |
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$5.22 |
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$1.51 |
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Operating Cash Flow |
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$4,950 |
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$3,190 |
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$7,044 |
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$4,465 |
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Non-GAAP* |
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Core Operating Earnings/(Loss) |
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$2,212 |
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($488) |
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$3,921 |
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$1,206 |
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Core Operating Margin |
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9.7% |
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(2.0)% |
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9.0% |
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2.5% |
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Core Earnings/(Loss) Per Share |
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$2.55 |
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($0.44) |
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$4.55 |
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$1.35 |
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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 strong earnings and
operating cash flow in the second quarter of 2017, driven
by improved operating performance (Table 1). Second-quarter
GAAP earnings per share increased to $2.89 and core earnings per share (non-GAAP)*
increased to $2.55. Revenue was
$22.7 billion, reflecting planned
production rates and timing of commercial and defense aircraft
deliveries.
For the full year, GAAP earnings per share guidance increased to
between $11.10 and $11.30 from
$10.35 and $10.55 and core earnings
per share (non-GAAP)* guidance increased to between $9.80 and $10.00 from $9.20 and $9.40, primarily driven by improved
performance across the company and a lower-than-expected tax rate.
Operating cash flow guidance increased by $1.5 billion to $12.25
billion on solid execution and a cash tax benefit from
accelerating pension funding in the third quarter of 2017.
Additionally, capital expenditures guidance decreased by
$300 million to $2.0 billion.
"Our teams are delivering better performance in every segment of
the business, which is reflected in our strong second-quarter
results and improved 2017 outlook," said Chairman, President and
Chief Executive Officer Dennis
Muilenburg. "Our robust cash flow enabled us to return more
value to shareholders, invest in future growth and in our people,
including a plan to accelerate pension funding that also reduces
risk and cyclicality in our business."
"In the second quarter, we added to our large and diverse order
backlog with key wins in commercial airplanes, defense, space and
services, while achieving important milestones such as delivering
the first 737 MAX airplane, flying the second production-ready T-X
trainer aircraft, and conducting a successful Ground-based
Midcourse Defense intercept test."
"As we look to the second half of the year, our teams are
focused on accelerating productivity, quality and safety
improvements across the company, while completing key development
efforts and delivering better capabilities and economics to our
customers."
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Table 2. Cash Flow |
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Second
Quarter |
First Half |
(Millions) |
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2017 |
2016 |
2017 |
2016 |
Operating Cash Flow |
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$4,950 |
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$3,190 |
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$7,044 |
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$4,465 |
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Less Additions to Property, Plant &
Equipment |
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($439) |
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($671) |
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($905) |
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($1,419) |
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Free Cash Flow* |
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$4,511 |
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$2,519 |
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$6,139 |
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$3,046 |
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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 of $5.0 billion was driven by strong operating
performance and favorable timing of receipts and expenditures
(Table 2). During the quarter, the company repurchased 13.6 million
shares for $2.5 billion, leaving
$9.0 billion remaining under the
current repurchase authorization. The company also paid
$0.9 billion in dividends in the
quarter, reflecting a 30 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 17 |
Q1 17 |
Cash |
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$8.7 |
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$8.2 |
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Marketable Securities1 |
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$1.6 |
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$1.0 |
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Total |
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$10.3 |
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$9.2 |
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Debt Balances: |
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The Boeing Company, net of intercompany loans to
BCC |
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$7.8 |
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$7.7 |
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Boeing Capital, including intercompany loans |
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$3.0 |
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$3.1 |
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Total Consolidated Debt |
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$10.8 |
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$10.8 |
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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
$10.3 billion, up from $9.2 billion at the beginning of the quarter
(Table 3). Debt was $10.8 billion,
unchanged from the beginning of the quarter.
Total company backlog at quarter-end was $482 billion, up from $480
billion at the beginning of the quarter, and included net
orders for the quarter of $27
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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2017 |
2016 |
Change |
2017 |
2016 |
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Change |
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Commercial Airplanes Deliveries |
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183 |
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199 |
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(8)% |
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352 |
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375 |
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(6)% |
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Revenues |
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$15,713 |
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$17,456 |
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(10)% |
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$30,018 |
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$31,855 |
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(6)% |
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Earnings/(Loss) from Operations |
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$1,567 |
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($973) |
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NM |
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$2,782 |
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$60 |
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NM |
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Operating Margin |
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10.0% |
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(5.6)% |
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15.6 Pts |
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9.3% |
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0.2% |
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9.1 Pts |
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Commercial Airplanes second-quarter revenue was $15.7 billion on planned production rates and
timing of deliveries (Table 4). Second-quarter operating margin was
10.0 percent, reflecting solid execution.
During the quarter, Commercial Airplanes delivered the first 737
MAX 8 aircraft and announced the launch of the 737 MAX 10. Demand
continues to be healthy with 571 incremental orders and commitments
announced at the Paris Air Show, including 56 for widebody aircraft
and 361 for the launch of the 737 MAX 10. Also at the Paris Air
Show, a number of commercial service agreements were announced that
provide further growth opportunity for Boeing Global Services.
Commercial Airplanes booked 183 net orders during the quarter.
Backlog remains robust with more than 5,700 airplanes valued at
$424 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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2017 |
2016 |
Change |
2017 |
2016 |
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Change |
Revenues |
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Boeing Military Aircraft |
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$2,904 |
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$2,979 |
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(3)% |
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$5,540 |
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$6,638 |
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(17)% |
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Network & Space Systems |
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$1,674 |
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$1,810 |
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(8)% |
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$3,238 |
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$3,545 |
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(9)% |
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Global Services & Support |
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$2,308 |
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$2,385 |
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(3)% |
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$4,640 |
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$4,947 |
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(6)% |
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Total BDS Revenues |
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$6,886 |
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$7,174 |
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(4)% |
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$13,418 |
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$15,130 |
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(11)% |
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Earnings from Operations |
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Boeing Military Aircraft |
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$382 |
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$175 |
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NM |
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$703 |
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$509 |
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NM |
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Network & Space Systems |
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$152 |
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$153 |
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(1)% |
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$250 |
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$301 |
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(17)% |
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Global Services & Support |
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$356 |
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$265 |
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34% |
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$674 |
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$605 |
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11% |
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Total BDS Earnings from Operations |
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$890 |
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$593 |
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50% |
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$1,627 |
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$1,415 |
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15% |
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Operating Margin |
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12.9% |
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8.3% |
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4.6 Pts |
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12.1% |
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9.4% |
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2.7 Pts |
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Defense, Space & Security second-quarter revenue was
$6.9 billion (Table 5).
Second-quarter operating margin increased to 12.9 percent,
reflecting increased productivity in all three segments.
Boeing Military Aircraft (BMA) second-quarter revenue was
$2.9 billion, reflecting lower
planned C-17 deliveries, and operating margin increased to 13.2
percent on improved performance. During the quarter, BMA was
awarded a contract for the remanufacture of 38 AH-64E Apache
helicopters for the United
Kingdom, and the second production-ready T-X aircraft
completed first flight.
Network & Space Systems (N&SS) second-quarter revenue
was $1.7 billion, reflecting timing
of satellite volume. Operating margin increased to 9.1 percent
reflecting improved performance. During the quarter, N&SS was
awarded a contract from the Missile Defense Agency for Redesigned
Kill Vehicle Development.
Global Services & Support (GS&S) second-quarter revenue
was $2.3 billion, reflecting timing
of contracts. Operating margin increased to 15.4 percent reflecting
strong performance. During the quarter, GS&S was awarded a
contract from the Defense Logistics Agency to support the F-15
fleet, which will be carried out by Boeing Global Services.
Backlog at Defense, Space & Security was $58 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 |
(Dollars in Millions) |
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2017 |
2016 |
2017 |
2016 |
Revenues |
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Boeing Capital |
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$72 |
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$84 |
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$164 |
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$148 |
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Unallocated items, eliminations and other |
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$68 |
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$41 |
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$115 |
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$254 |
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Earnings from Operations |
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Boeing Capital |
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$25 |
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$18 |
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$64 |
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$23 |
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Unallocated pension/postretirement |
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$323 |
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$69 |
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$638 |
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$163 |
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Other unallocated items and eliminations |
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($270) |
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($126) |
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($552) |
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($292) |
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Other income, net |
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$27 |
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$13 |
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$49 |
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$39 |
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Interest and debt expense |
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($93) |
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($73) |
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($180) |
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($146) |
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Effective tax rate |
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28.7% |
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51.1% |
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27.5% |
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21.9% |
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At quarter-end, Boeing Capital's net portfolio balance was
$3.9 billion. Total pension expense
for the second quarter was $100
million, down from $463
million in the same period of the prior year. Other
unallocated items and eliminations earnings decreased primarily due
to timing of expense allocations. The effective tax rate for the
second quarter was 28.7 percent reflecting higher-than-expected tax
benefits related to share-based compensation.
Accelerated Pension Funding
In addition to the $500 million
pension contribution originally planned for 2017, the company will
accelerate approximately four years of pension funding by making a
discretionary contribution of $3.5
billion of Boeing common shares in the third quarter of this
year. Subsequently, the company expects to utilize its strong cash
position and increase its 2017 planned share repurchases by
$3.5 billion to a total of
approximately $10 billion for the
full year. It is expected that this contribution will nearly
eliminate all future mandatory pension funding through 2021 based
on existing assumptions for asset returns and discount rates. "Over
the past several years, we have taken meaningful actions to retire
risk and reduce cyclicality, and today's actions are another step
forward," said Greg Smith, Chief
Financial Officer and Executive Vice President of Enterprise
Performance & Strategy.
The company expects approximately $700
million cash tax savings from the accelerated pension
funding in 2017, which is reflected in the updated cash flow
guidance. Boeing continues to anticipate cash flows to grow
annually through the end of the decade and remains committed to
returning free cash flow to shareholders.
Outlook
The company's 2017 updated guidance (Table 7) reflects the
impact of improved performance across the company and a
lower-than-expected tax rate.
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Table 7. 2017 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 |
$90.5 - 92.5 |
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$90.5 - 92.5 |
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GAAP Earnings Per Share |
$11.10 - 11.30 |
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$10.35 - 10.55 |
Core Earnings Per Share* |
$9.80 - 10.00 |
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$9.20 - 9.40 |
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Operating Cash Flow |
~$12.25 |
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~$10.75 |
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Commercial Airplanes |
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Deliveries |
760 - 765 |
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760 - 765 |
Revenue |
$62.5 - 63.5 |
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$62.5 - 63.5 |
Operating Margin |
>10.0% |
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9.5% - 10.0 |
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Defense, Space & Security |
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Revenue |
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Boeing Military Aircraft |
~$11.5 |
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~$11.5 |
Network & Space Systems |
~$7.0 |
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~$7.0 |
Global Services & Support |
~$10.0 |
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~$10.0 |
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Total BDS Revenue |
$28.0 - 29.0 |
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$28.0 - 29.0 |
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Operating Margin |
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Boeing Military Aircraft |
>12.0% |
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~12.0% |
Network & Space Systems |
~8.0% |
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~9.0% |
Global Services & Support |
>13.5% |
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>12.5% |
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Total BDS Operating Margin |
>11.5% |
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~11.5% |
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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 |
~$0.08 |
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~$0.05 |
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Research & Development |
~ $3.6 |
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~ $3.6 |
Capital Expenditures |
~ $2.0 |
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~ $2.3 |
Pension Expense 1 |
~ $0.6 |
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~ $0.7 |
Effective Tax Rate |
~ 29.0% |
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~ 31.0% |
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1 Approximately
($1.0) 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 Generally Accepted Accounting Principles in
the United States of America
(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 other postretirement benefit 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 other postretirement benefit expense.
Unallocated pension and other postretirement benefit 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 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/(loss), core
operating margin and core earnings/(loss) 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 generally 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 expectations and assumptions that we
believe to be reasonable when made, but that 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: |
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Bernard Choi (312) 544-2002 |
The Boeing Company
and Subsidiaries |
Consolidated
Statements of Operations |
(Unaudited) |
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Six months ended
June 30 |
Three months
ended
June 30 |
(Dollars in millions, except per share
data) |
2017 |
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2016 |
|
2017 |
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2016 |
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Sales of products |
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$38,659 |
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$42,069 |
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|
$20,147 |
|
|
$22,184 |
|
Sales of services |
5,056 |
|
5,318 |
|
2,592 |
|
2,571 |
|
Total revenues |
43,715 |
|
47,387 |
|
22,739 |
|
24,755 |
|
|
|
|
|
|
Cost of products |
(31,806) |
|
(37,210) |
|
(16,443) |
|
(20,265) |
|
Cost of services |
(3,820) |
|
(4,180) |
|
(1,932) |
|
(2,044) |
|
Boeing Capital interest expense |
(26) |
|
(32) |
|
(13) |
|
(16) |
|
Total costs and expenses |
(35,652) |
|
(41,422) |
|
(18,388) |
|
(22,325) |
|
|
8,063 |
|
5,965 |
|
4,351 |
|
2,430 |
|
Income from operating investments, net |
120 |
|
151 |
|
39 |
|
97 |
|
General and administrative expense |
(1,973) |
|
(1,694) |
|
(1,040) |
|
(806) |
|
Research and development expense, net |
(1,651) |
|
(3,044) |
|
(813) |
|
(2,127) |
|
Loss on dispositions, net |
|
|
(9) |
|
(2) |
|
(13) |
|
Earnings/(loss) from operations |
4,559 |
|
1,369 |
|
2,535 |
|
(419) |
|
Other income, net |
49 |
|
39 |
|
27 |
|
13 |
|
Interest and debt expense |
(180) |
|
(146) |
|
(93) |
|
(73) |
|
Earnings/(loss) before income taxes |
4,428 |
|
1,262 |
|
2,469 |
|
(479) |
|
Income tax (expense)/benefit |
(1,216) |
|
(277) |
|
(708) |
|
245 |
|
Net earnings/(loss) |
|
$3,212 |
|
|
$985 |
|
|
$1,761 |
|
|
($234) |
|
|
|
|
|
|
Basic earnings/(loss) per share |
|
$5.28 |
|
|
$1.52 |
|
|
$2.93 |
|
|
($0.37) |
|
|
|
|
|
|
Diluted earnings/(loss) per share |
|
$5.22 |
|
|
$1.51 |
|
|
$2.89 |
|
|
($0.37) |
|
|
|
|
|
|
Cash dividends paid per share |
|
$2.84 |
|
|
$2.18 |
|
|
$1.42 |
|
|
$1.09 |
|
|
|
|
|
|
Weighted average diluted shares
(millions) |
615.3 |
|
654.9 |
|
609.6 |
|
636.3 |
|
The Boeing Company
and Subsidiaries |
Consolidated
Statements of Financial Position |
(Unaudited) |
|
|
|
|
|
|
|
|
(Dollars in millions, except per share
data) |
June 30
2017 |
|
December 31
2016 |
|
Assets |
|
|
Cash and cash equivalents |
|
$8,737 |
|
|
$8,801 |
|
Short-term and other investments |
1,589 |
|
1,228 |
|
Accounts receivable, net |
9,503 |
|
8,832 |
|
Current portion of customer financing, net |
549 |
|
428 |
|
Inventories, net of advances and progress
billings |
42,453 |
|
43,199 |
|
Total current assets |
62,831 |
|
62,488 |
|
Customer financing, net |
3,398 |
|
3,773 |
|
Property, plant and equipment, net of accumulated
depreciation of $17,380 and $16,883 |
12,820 |
|
12,807 |
|
Goodwill |
5,347 |
|
5,324 |
|
Acquired intangible assets, net |
2,567 |
|
2,540 |
|
Deferred income taxes |
325 |
|
332 |
|
Investments |
1,278 |
|
1,317 |
|
Other assets, net of accumulated amortization of
$484 and $497 |
1,470 |
|
1,416 |
|
Total assets |
|
$90,036 |
|
|
$89,997 |
|
Liabilities and equity |
|
|
Accounts payable |
|
$12,093 |
|
|
$11,190 |
|
Accrued liabilities |
14,294 |
|
14,691 |
|
Advances and billings in excess of related
costs |
25,802 |
|
23,869 |
|
Short-term debt and current portion of long-term
debt |
720 |
|
384 |
|
Total current liabilities |
52,909 |
|
50,134 |
|
Deferred income taxes |
1,415 |
|
1,338 |
|
Accrued retiree health care |
5,856 |
|
5,916 |
|
Accrued pension plan liability, net |
19,651 |
|
19,943 |
|
Other long-term liabilities |
2,128 |
|
2,221 |
|
Long-term debt |
10,055 |
|
9,568 |
|
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 |
4,644 |
|
4,762 |
|
Treasury stock, at cost - 419,062,607 and
395,109,568 shares |
(40,730) |
|
(36,097) |
|
Retained earnings |
42,222 |
|
40,714 |
|
Accumulated other comprehensive loss |
(13,234) |
|
(13,623) |
|
Total shareholders' equity |
(2,037) |
|
817 |
|
Noncontrolling interests |
59 |
|
60 |
|
Total equity |
(1,978) |
|
877 |
|
Total liabilities and equity |
|
$90,036 |
|
|
$89,997 |
|
The Boeing Company
and Subsidiaries |
Consolidated
Statements of Cash Flows |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Six months ended
June 30 |
(Dollars in millions) |
2017 |
|
2016 |
|
Cash flows – operating
activities: |
|
|
Net earnings |
|
$3,212 |
|
|
$985 |
|
Adjustments to reconcile net earnings to net cash
provided by operating activities: |
|
|
Non-cash items – |
|
|
Share-based plans expense |
98 |
|
97 |
|
Depreciation and amortization |
965 |
|
890 |
|
Investment/asset impairment charges, net |
46 |
|
50 |
|
Customer financing valuation
expense/(benefit) |
5 |
|
(4) |
|
Loss on dispositions, net |
|
|
9 |
|
Other charges and credits, net |
129 |
|
141 |
|
Changes in assets and liabilities – |
|
|
Accounts receivable |
(912) |
|
(503) |
|
Inventories, net of advances and progress
billings |
877 |
|
3,004 |
|
Accounts payable |
419 |
|
1,221 |
|
Accrued liabilities |
(680) |
|
(269) |
|
Advances and billings in excess of related
costs |
1,934 |
|
(954) |
|
Income taxes receivable, payable and deferred |
712 |
|
(494) |
|
Other long-term liabilities |
(18) |
|
(103) |
|
Pension and other postretirement plans |
13 |
|
181 |
|
Customer financing, net |
343 |
|
275 |
|
Other |
(99) |
|
(61) |
|
Net cash provided by operating
activities |
7,044 |
|
4,465 |
|
Cash flows – investing activities: |
|
|
Property, plant and equipment additions |
(905) |
|
(1,419) |
|
Property, plant and equipment reductions |
25 |
|
13 |
|
Contributions to investments |
(1,820) |
|
(657) |
|
Proceeds from investments |
1,441 |
|
705 |
|
Purchase of distribution rights |
(131) |
|
|
Other |
4 |
|
8 |
|
Net cash used by investing
activities |
(1,386) |
|
(1,350) |
|
Cash flows – financing activities: |
|
|
New borrowings |
874 |
|
1,323 |
|
Debt repayments |
(56) |
|
(267) |
|
Repayments of distribution rights and other asset
financing |
|
|
(24) |
|
Stock options exercised |
240 |
|
147 |
|
Employee taxes on certain share-based payment
arrangements |
(112) |
|
(79) |
|
Common shares repurchased |
(5,000) |
|
(5,501) |
|
Dividends paid |
(1,720) |
|
(1,408) |
|
Net cash used by financing
activities |
(5,774) |
|
(5,809) |
|
Effect of exchange rate changes on cash and cash
equivalents |
52 |
|
(3) |
|
Net decrease in cash and cash
equivalents |
(64) |
|
(2,697) |
|
Cash and cash equivalents at beginning of
year |
8,801 |
|
11,302 |
|
Cash and cash equivalents at end of
period |
|
$8,737 |
|
|
$8,605 |
|
The Boeing Company
and Subsidiaries |
Summary of Business
Segment Data |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30 |
Three months
ended
June 30 |
(Dollars in millions) |
2017 |
|
2016 |
|
2017 |
|
2016 |
|
Revenues: |
|
|
|
|
Commercial Airplanes |
|
$30,018 |
|
|
$31,855 |
|
|
$15,713 |
|
|
$17,456 |
|
Defense, Space & Security: |
|
|
|
|
Boeing Military Aircraft |
5,540 |
|
6,638 |
|
2,904 |
|
2,979 |
|
Network & Space Systems |
3,238 |
|
3,545 |
|
1,674 |
|
1,810 |
|
Global Services & Support |
4,640 |
|
4,947 |
|
2,308 |
|
2,385 |
|
Total Defense, Space & Security |
13,418 |
|
15,130 |
|
6,886 |
|
7,174 |
|
Boeing Capital |
164 |
|
148 |
|
72 |
|
84 |
|
Unallocated items, eliminations and other |
115 |
|
254 |
|
68 |
|
41 |
|
Total revenues |
|
$43,715 |
|
|
$47,387 |
|
|
$22,739 |
|
|
$24,755 |
|
Earnings/(loss) from operations: |
|
|
|
|
Commercial Airplanes |
|
$2,782 |
|
|
$60 |
|
|
$1,567 |
|
|
($973) |
|
Defense, Space & Security: |
|
|
|
|
Boeing Military Aircraft |
703 |
|
509 |
|
382 |
|
175 |
|
Network & Space Systems |
250 |
|
301 |
|
152 |
|
153 |
|
Global Services & Support |
674 |
|
605 |
|
356 |
|
265 |
|
Total Defense, Space & Security |
1,627 |
|
1,415 |
|
890 |
|
593 |
|
Boeing Capital |
64 |
|
23 |
|
25 |
|
18 |
|
Segment operating profit |
4,473 |
|
1,498 |
|
2,482 |
|
(362) |
|
Unallocated items, eliminations and other |
86 |
|
(129) |
|
53 |
|
(57) |
|
Earnings/(loss) from operations |
4,559 |
|
1,369 |
|
2,535 |
|
(419) |
|
Other income, net |
49 |
|
39 |
|
27 |
|
13 |
|
Interest and debt expense |
(180) |
|
(146) |
|
(93) |
|
(73) |
|
Earnings/(loss) before income taxes |
4,428 |
|
1,262 |
|
2,469 |
|
(479) |
|
Income tax (expense)/benefit |
(1,216) |
|
(277) |
|
(708) |
|
245 |
|
Net earnings/(loss) |
|
$3,212 |
|
|
$985 |
|
|
$1,761 |
|
|
($234) |
|
|
|
|
|
|
Research and development expense, net: |
|
|
|
|
Commercial Airplanes |
|
$1,238 |
|
|
$2,548 |
|
|
$602 |
|
|
$1,877 |
|
Defense, Space & Security |
435 |
|
521 |
|
222 |
|
263 |
|
Other |
(22) |
|
(25) |
|
(11) |
|
(13) |
|
Total research and development expense,
net |
|
$1,651 |
|
|
$3,044 |
|
|
$813 |
|
|
$2,127 |
|
|
|
|
|
|
Unallocated items, eliminations and
other |
|
|
|
|
Share-based plans |
|
($46) |
|
|
($41) |
|
|
($25) |
|
|
($18) |
|
Deferred compensation |
(96) |
|
(5) |
|
(46) |
|
(21) |
|
Amortization of previously capitalized
interest |
(51) |
|
(48) |
|
(20) |
|
(18) |
|
Eliminations and other unallocated items |
(359) |
|
(198) |
|
(179) |
|
(69) |
|
Sub-total (included in core operating
earnings) |
(552) |
|
(292) |
|
(270) |
|
(126) |
|
Pension |
533 |
|
79 |
|
278 |
|
34 |
|
Postretirement |
105 |
|
84 |
|
45 |
|
35 |
|
Total unallocated items, eliminations and
other |
|
$86 |
|
|
($129) |
|
|
$53 |
|
|
($57) |
|
The Boeing Company
and Subsidiaries |
Operating and
Financial Data |
(Unaudited) |
|
|
Deliveries |
|
Six months ended
June 30 |
Three months
ended
June 30 |
Commercial Airplanes |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
737 |
|
236 |
|
248 |
|
123 |
|
127 |
|
747 |
|
4 |
(1) |
3 |
|
3 |
|
2 |
|
767 |
|
5 |
|
5 |
|
3 |
|
4 |
|
777 |
|
42 |
|
51 |
|
21 |
|
28 |
|
787 |
|
65 |
|
68 |
|
33 |
|
38 |
|
Total |
|
352 |
|
375 |
|
183 |
|
199 |
|
Note: Deliveries under operating
lease are identified by parentheses. |
|
|
|
|
|
|
Defense, Space & Security |
|
|
|
|
|
Boeing Military Aircraft |
|
|
|
|
|
AH-64 Apache (New) |
|
5 |
|
15 |
|
2 |
|
8 |
|
AH-64 Apache (Remanufactured) |
|
28 |
|
18 |
|
15 |
|
7 |
|
C-17 Globemaster III |
|
|
4 |
|
|
|
1 |
|
CH-47 Chinook (New) |
|
4 |
|
10 |
|
1 |
|
7 |
|
CH-47 Chinook (Renewed) |
|
19 |
|
16 |
|
10 |
|
7 |
|
F-15 Models |
|
7 |
|
7 |
|
4 |
|
3 |
|
F/A-18 Models |
|
12 |
|
14 |
|
6 |
|
6 |
|
P-8 Models |
|
9 |
|
9 |
|
5 |
|
5 |
|
|
|
|
|
|
|
Network & Space Systems |
|
|
|
|
|
Commercial and Civil Satellites |
|
3 |
|
1 |
|
2 |
|
|
Military Satellites |
|
|
1 |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractual backlog (Dollars in
billions) |
|
|
June 30
2017 |
|
March 31
2017 |
|
December 31
2016 |
Commercial Airplanes |
|
|
$423.4 |
|
$415.1 |
|
$416.2 |
Defense, Space & Security: |
|
|
|
|
|
Boeing Military Aircraft |
|
|
22.4 |
|
23.4 |
|
21.4 |
Network & Space Systems |
|
|
4.5 |
|
6.0 |
|
5.1 |
Global Services & Support |
|
|
17.3 |
|
17.0 |
|
15.6 |
Total Defense, Space & Security |
|
|
44.2 |
|
46.4 |
|
42.1 |
Total contractual backlog |
|
|
$467.6 |
|
$461.5 |
|
$458.3 |
Unobligated backlog |
|
|
$14.6 |
|
$18.0 |
|
$15.2 |
Total backlog |
|
|
$482.2 |
|
$479.5 |
|
$473.5 |
Workforce |
|
|
144,000 |
|
147,000 |
|
150,500 |
The Boeing Company and
Subsidiaries
Reconciliation of Non-GAAP Measures
(Unaudited)
The tables provided below reconcile the non-GAAP financial
measures core operating earnings/(loss), core operating margin, and
core earnings/(loss) per share with the most directly comparable
GAAP financial measures, earnings from operations/(loss), operating
margin, and diluted earnings/(loss) 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) |
Second
Quarter |
First Half |
Guidance |
|
2017 |
2016 |
2017 |
2016 |
2017 |
Revenues |
|
$22,739 |
|
|
$24,755 |
|
|
$43,715 |
|
|
$47,387 |
|
|
|
|
|
|
|
|
GAAP Earnings/(Loss) From Operations |
|
$2,535 |
|
|
($419) |
|
|
$4,559 |
|
|
$1,369 |
|
|
|
|
|
|
|
|
Unallocated Pension Income |
|
($278) |
|
|
($34) |
|
|
($533) |
|
|
($79) |
|
|
Unallocated Other Postretirement Benefit
Income |
|
($45) |
|
|
($35) |
|
|
($105) |
|
|
($84) |
|
|
Unallocated Pension and Other Postretirement
Benefit Income |
|
($323) |
|
|
($69) |
|
|
($638) |
|
|
($163) |
|
~($1,220) |
Core Operating Earnings/(Loss)
(non-GAAP) |
|
$2,212 |
|
|
($488) |
|
|
$3,921 |
|
|
$1,206 |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted Earnings/(Loss) Per Share |
|
$2.89 |
|
|
($0.37) |
|
|
$5.22 |
|
|
$1.51 |
|
$11.10 - $11.30 |
Unallocated Pension Income |
|
($0.46) |
|
|
($0.05) |
|
|
($0.86) |
|
|
($0.12) |
|
|
Unallocated Postretirement Benefit
Income |
|
($0.07) |
|
|
($0.06) |
|
|
($0.17) |
|
|
($0.13) |
|
($1.30) |
Provision for deferred income taxes on
adjustments (1) |
|
$0.19 |
|
|
$0.04 |
|
|
$0.36 |
|
|
$0.09 |
|
|
Core Earnings/(Loss) Per Share
(non-GAAP) |
|
$2.55 |
|
|
($0.44) |
|
|
$4.55 |
|
|
$1.35 |
|
$9.80 - $10.00 |
|
|
|
|
|
|
Weighted Average Diluted Shares
(millions) |
609.6 |
|
636.3 |
|
615.3 |
|
654.9 |
|
~ 610 |
|
|
|
|
|
|
(1) The
income tax impact is calculated using the tax rate in effect for
the non-GAAP adjustments. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|