Boeing Reports
Record 2018 Results and Provides 2019 Guidance
CHICAGO, Jan. 30, 2019 /PRNewswire/ --
Fourth Quarter
2018
- Record revenue of $28.3
billion and record operating profit of $4.2 billion driven by higher volume
- Record GAAP EPS of $5.93 and
record core EPS (non-GAAP)* of $5.48
on strong performance
Full-Year 2018
- Record revenue of $101.1
billion reflecting strong growth across the
portfolio
- Record GAAP EPS of $17.85 and
record core EPS (non-GAAP)* of $16.01
driven by solid execution
- Record operating cash flow of $15.3
billion; repurchased 26.1 million shares for $9.0 billion
- Total backlog remains robust at $490
billion, including nearly 5,900 commercial
airplanes
- Cash and marketable securities of $8.6 billion provide strong liquidity
Outlook for
2019
- Revenue guidance of between $109.5 and $111.5
billion reflects higher volume across all
businesses
- GAAP EPS of between $21.90 and
$22.10; core EPS (non-GAAP)* of
between $19.90 and $20.10
- Operating cash flow expected to increase to between
$17.0 and $17.5 billion
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Table 1. Summary Financial Results |
Fourth
Quarter |
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|
Full Year |
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(Dollars in Millions, except per share
data) |
2018 |
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2017 |
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Change |
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2018 |
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2017 |
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Change |
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Revenues |
$28,341 |
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$24,770 |
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14% |
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$101,127 |
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$94,005 |
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8% |
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GAAP |
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Earnings From Operations |
$4,175 |
|
$2,978 |
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40% |
|
$11,987 |
|
$10,344 |
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16% |
Operating Margin |
14.7% |
|
12.0% |
|
2.7 Pts |
|
11.9% |
|
11.0% |
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0.9 Pts |
Net Earnings |
$3,424 |
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$3,320 |
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3% |
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$10,460 |
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$8,458 |
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24% |
Earnings Per Share |
$5.93 |
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$5.49 |
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8% |
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$17.85 |
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$13.85 |
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29% |
Operating Cash Flow |
$2,947 |
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$2,903 |
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2% |
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$15,322 |
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$13,346 |
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15% |
Non-GAAP* |
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Core Operating Earnings |
$3,867 |
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$2,589 |
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49% |
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$10,660 |
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$8,906 |
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20% |
Core Operating Margin |
13.6% |
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10.5% |
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3.1 Pts |
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10.5% |
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9.5% |
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1.0 Pts |
Core Earnings Per Share |
$5.48 |
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$5.07 |
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8% |
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$16.01 |
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$12.33 |
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30% |
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*Non-GAAP measure; complete
definitions of Boeing's non-GAAP measures are on page 6, "Non-GAAP
Measures Disclosures." |
The Boeing Company [NYSE: BA] reported fourth-quarter revenue of
$28.3 billion, GAAP earnings per
share of $5.93 and core earnings per
share (non-GAAP)* of $5.48, all
company records. These results reflect record commercial
deliveries, higher defense and services volume and strong
performance which outweighed favorable tax impacts recorded in the
fourth quarter of 2017 (Table 1). Boeing generated operating cash
flow of $2.9 billion, repurchased 1.6
million shares for $0.6 billion,
paid $1.0 billion of dividends
and completed the acquisition of KLX.
Revenue was a record $101.1
billion for the full year reflecting higher commercial
deliveries and increased volume across the company. Records for
GAAP earnings per share of $17.85 and
core earnings per share (non-GAAP)* of $16.01 were driven by higher volume, improved mix
and solid execution.
"Across the enterprise our team delivered strong core operating
performance and customer focus, driving record revenues, earnings
and cash flow and further extending our global aerospace industry
leadership in 2018," said Boeing Chairman, President and Chief
Executive Officer Dennis Muilenburg.
"Our financial performance provided a firm platform to further
invest in new growth businesses, innovation and future franchise
programs, as well as in our people and enabling technologies. In
the last 5 years, we have invested nearly $35 billion in key strategic areas of our
business, all while increasing cash returns to shareholders."
"Our One Boeing focus, clear strategies for growth, and leading
positions in large and growing markets, give us confidence for
continued strong performance, revenue expansion and solid execution
across all three businesses, which is reflected in our 2019
guidance."
"We remain focused on executing on our production and
development programs as well as our growth strategy while driving
further productivity, quality and safety improvements, investing in
our team and creating more value and opportunity for our customers,
shareholders and employees."
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Table 2. Cash Flow |
Fourth
Quarter |
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Full Year |
(Millions) |
2018 |
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2017 |
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2018 |
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2017 |
Operating Cash Flow |
$2,947 |
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$2,903 |
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$15,322 |
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$13,346 |
Less Additions to Property, Plant &
Equipment |
($495) |
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($435) |
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($1,722) |
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($1,739) |
Free Cash Flow* |
$2,452 |
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$2,468 |
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$13,600 |
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$11,607 |
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*Non-GAAP measure; complete
definitions of Boeing's non-GAAP measures are on page 6, "Non-GAAP
Measures Disclosures." |
Operating cash flow was $2.9
billion in the quarter and $15.3
billion for the full year, reflecting planned higher
commercial airplane production rates and strong operating
performance as well as timing of receipts and expenditures (Table
2). During the quarter, the company repurchased 1.6 million shares
for $0.6 billion, paid
$1.0 billion in dividends, and
completed the acquisition of KLX. For the full year, the company
repurchased 26.1 million shares for $9.0 billion and paid $3.9 billion in dividends. Based on strong cash
generation and confidence in the company's outlook, the board of
directors in December increased the quarterly dividend per share by
20 percent and replaced the existing share repurchase program with
a new $20 billion authorization.
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Table 3. Cash, Marketable Securities and Debt
Balances |
Quarter-End |
(Billions) |
Q4 18 |
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Q3 18 |
Cash |
$7.7 |
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$8.0 |
Marketable Securities1 |
$0.9 |
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$2.0 |
Total |
$8.6 |
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$10.0 |
Debt Balances: |
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The Boeing Company, net of intercompany loans to
BCC |
$11.3 |
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$9.4 |
Boeing Capital, including intercompany loans |
$2.5 |
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$2.5 |
Total Consolidated Debt |
$13.8 |
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$11.9 |
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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
$8.6 billion, compared to
$10.0 billion at the beginning of the
quarter (Table 3). Debt was $13.8
billion, up from $11.9 billion
at the beginning of the quarter primarily due to the issuance of
new debt following the KLX acquisition.
Total company backlog at quarter-end was relatively unchanged at
$490 billion and included net orders
for the quarter of $27 billion.
Segment Results
Commercial Airplanes
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Table 4. Commercial Airplanes |
Fourth
Quarter |
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Full Year |
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(Dollars in Millions) |
2018 |
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2017 |
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Change |
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2018 |
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2017 |
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Change |
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Commercial Airplanes Deliveries |
238 |
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209 |
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14% |
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806 |
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763 |
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6% |
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Revenues |
$17,306 |
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15,388 |
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12% |
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$60,715 |
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$58,014 |
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5% |
Earnings from Operations |
$2,704 |
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$1,787 |
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51% |
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$7,879 |
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$5,452 |
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45% |
Operating Margin |
15.6% |
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11.6% |
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4.0 Pts |
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13.0% |
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9.4% |
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3.6 Pts |
Commercial Airplanes fourth-quarter revenue increased to
$17.3 billion reflecting higher
deliveries and favorable mix (Table 4). Fourth-quarter operating
margin increased to 15.6 percent, driven by higher 737 volume and
strong operating performance on production programs, including
higher 787 margins.
During the quarter, Commercial Airplanes delivered 238
airplanes, including the delivery of the 787th 787 Dreamliner and
the first 737 MAX Boeing Business Jet. The 737 program delivered
111 MAX airplanes in the fourth quarter, including the first MAX
delivery from the China Completion Center, and delivered 256 MAX
airplanes in 2018. The first 777X flight test airplane completed
final body join and power-on, and the program remains on track for
flight testing this year and first delivery in 2020.
Commercial Airplanes booked 262 net orders during the quarter,
valued at $16 billion. Backlog
remains robust with nearly 5,900 airplanes valued at $412 billion.
Defense, Space & Security
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Table 5. Defense, Space & Security |
Fourth
Quarter |
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Full Year |
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(Dollars in Millions) |
2018 |
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2017 |
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Change |
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2018 |
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2017 |
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Change |
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Revenues |
$6,111 |
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$5,257 |
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16% |
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$23,195 |
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$20,561 |
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13% |
Earnings from Operations |
$669 |
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$544 |
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23% |
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$1,594 |
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$2,193 |
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(27%) |
Operating Margin |
10.9% |
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10.3% |
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0.6 Pts |
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6.9% |
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10.7% |
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(3.8) Pts |
Defense, Space & Security fourth-quarter revenue increased
to $6.1 billion driven by increased
volume across F/A-18, satellites, and weapons (Table 5).
Fourth-quarter operating margin increased to 10.9 percent,
primarily reflecting favorable mix.
During the quarter, Defense, Space & Security was awarded
contracts for the second KC-46 Tanker to Japan, a joint ground system to provide
tactical satellite communications for the U.S. Air Force and to
modernize 17 Chinooks for Spain.
Defense, Space & Security also completed a successful test for
the U.S. Air Force's Minuteman III and unveiled the SB>1 DEFIANT
helicopter for the U.S. Army. In January, the first two KC-46
Tankers were delivered to the U.S. Air Force.
Backlog at Defense, Space & Security was $57 billion, of which 30 percent represents
orders from customers outside the U.S.
Global Services
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Table 6. Global Services |
Fourth
Quarter |
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Full Year |
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(Dollars in Millions) |
2018 |
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2017 |
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Change |
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2018 |
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2017 |
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Change |
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Revenues |
$4,894 |
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$3,797 |
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29% |
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$17,018 |
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$14,581 |
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17% |
Earnings from Operations |
$732 |
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$559 |
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31% |
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$2,522 |
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$2,246 |
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12% |
Operating Margin |
15.0% |
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14.7% |
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0.3 Pts |
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14.8% |
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15.4% |
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(0.6) Pts |
Global Services fourth-quarter revenue increased to $4.9 billion, primarily driven by higher parts
volume including the acquisition of KLX (Table 6). Fourth-quarter
operating margin increased to 15.0 percent reflecting improved
performance, partially offset by higher period costs.
During the quarter, Global Services was awarded Performance
Based Logistics contracts for C-17 and F-22 for the U.S. Air Force
and F-15 for Qatar as well as
contracts for F/A-18 services for the U.S Navy. Global Services was
also selected by Shenzhen Airlines to provide crew management
solutions, making them the first airline in China to utilize Boeing AnalytX-powered
services. Significant milestones during the quarter included the
first KC-46 training flight with the U.S. Air Force. In addition,
Global Services successfully began integrating KLX and began
operations of the Auxiliary Power Unit joint venture with
Safran.
Additional Financial Information
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Table 7. Additional Financial
Information |
Fourth
Quarter |
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Full Year |
(Dollars in Millions) |
2018 |
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2017 |
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2018 |
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2017 |
Revenues |
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Boeing Capital |
$60 |
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$73 |
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$274 |
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$307 |
Unallocated items, eliminations and other |
($30) |
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$255 |
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($75) |
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$542 |
Earnings from Operations |
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Boeing Capital |
$8 |
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$27 |
|
$79 |
|
$114 |
FAS/CAS service cost adjustment |
$308 |
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$389 |
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$1,327 |
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$1,438 |
Other unallocated items and eliminations |
($246) |
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($328) |
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($1,414) |
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($1,099) |
Other income, net |
$29 |
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$32 |
|
$92 |
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$123 |
Interest and debt expense |
($158) |
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($93) |
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($475) |
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($360) |
Effective tax rate |
15.4% |
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(13.8)% |
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9.9% |
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16.3% |
At quarter-end, Boeing Capital's net portfolio balance was
$2.8 billion. Revenue in other
unallocated items and eliminations decreased primarily due to the
timing of eliminations for intercompany aircraft deliveries and the
2017 sale of aircraft previously leased to customers. The change in
earnings from other unallocated items and eliminations is primarily
due to timing of expense allocations. The effective tax rate for
the fourth quarter increased from the same period in the prior year
primarily due to the favorable impacts from the enactment of the
Tax Cuts and Jobs Act recorded in the fourth quarter of 2017.
Outlook
Effective in the first quarter of 2019, the Company is making a
change to the accounting for military derivative aircraft. Revenues
and costs associated with military derivative aircraft were
previously reported in the Commercial Airplanes and Defense, Space
& Security segments. Beginning in 2019, all revenues and costs
associated with military derivative aircraft will be reported in
the Defense, Space & Security segment. An additional exhibit is
included on page 15 with restated 2018 results adjusted for the
change in accounting for military derivative aircraft as well as
the realignment of certain programs between Global Services and
Defense, Space & Security. The Company has provided this
comparable information in the exhibit and below to help investors
understand the 2019 financial outlook (Table 8).
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Table 8. 2019 Financial Outlook |
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Restated |
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As Reported |
(Dollars in Billions, except per share
data) |
2019 |
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2018 Results |
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2018 Results |
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The Boeing Company |
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Revenue |
$109.5 - 111.5 |
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GAAP Earnings Per Share |
$21.90 - 22.10 |
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Core Earnings Per Share* |
$19.90 - 20.10 |
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Operating Cash Flow |
$17.0 - $17.5B |
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Commercial Airplanes |
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Deliveries 1 |
895 - 905 |
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Revenue |
$64.5 - 65.5 |
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$57.5 |
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$60.7 |
Operating Margin |
14.5% - 15.0% |
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13.6% |
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13.0% |
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Defense, Space & Security |
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Revenue |
$26.5 - 27.5 |
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$26.4 |
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$23.2 |
Operating Margin |
>11.0% |
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6.3% |
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6.9% |
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Global Services |
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Revenue |
$18.5 - 19.0 |
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$17.1 |
|
$17.0 |
Operating
Margin |
>15.0% |
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14.9% |
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14.8% |
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Boeing Capital Portfolio Size |
Stable |
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Research & Development |
~$4.1 |
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Capital Expenditures |
~$2.3 |
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Pension Expense 2 |
~$0.0 |
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Effective Tax Rate |
~16% |
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*Non-GAAP measure; complete
definitions of Boeing's non-GAAP measures are on page 6, "Non-GAAP
Measures Disclosures." |
1 Continues to
include intercompany deliveries related to military derivative
aircraft |
2 Approximately
$1.1 billion of pension expense is expected to be allocated to the
business segments |
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, Core Operating Margin and Core Earnings
Per Share
Core operating earnings is defined as GAAP earnings from
operations excluding the FAS/CAS service cost
adjustment. The FAS/CAS service cost adjustment
represents the difference between the FAS pension and
postretirement service costs calculated under GAAP and costs
allocated to the business segments. 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 the FAS/CAS service cost adjustment and Non-operating
pension and postretirement expenses. Non-operating pension and
postretirement expenses represent the components of net periodic
benefit costs other than service cost. Pension costs, comprising
service and prior service costs computed in accordance with GAAP
are allocated to Commercial Airplanes and BGS businesses supporting
commercial customers. Pension costs allocated to BDS and BGS
businesses supporting government customers 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
non-service 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 pages 13-14.
Free Cash Flow
Free cash flow is defined as GAAP operating cash flow
without capital expenditures for property, plant and equipment
additions. Management believes free cash flow provides
investors with an important perspective on the cash available for
shareholders, debt repayment, and acquisitions after making the
capital investments required to support ongoing business operations
and long term value creation. Free cash flow does not represent the
residual cash flow available for discretionary expenditures as it
excludes certain mandatory expenditures such as repayment of
maturing debt. Management uses free cash flow as a measure to
assess both business performance and overall liquidity. Table 2
provides a reconciliation between GAAP operating cash flow and free
cash flow.
Caution Concerning
Forward-Looking Statements
This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995. Words such as "may," "should," "expects," "intends,"
"projects," "plans," "believes," "estimates," "targets,"
"anticipates," and similar expressions 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 commercial aircraft production rate changes, 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) threats to the security of our or our
customers' information; (14) potential adverse developments in new
or pending litigation and/or government investigations; (15)
customer and aircraft concentration in our customer financing
portfolio; (16) changes in our ability to obtain debt on
commercially reasonable terms and at competitive rates; (17)
realizing the anticipated benefits of mergers, acquisitions, joint
ventures/strategic alliances or divestitures; (18) the adequacy of
our insurance coverage to cover significant risk exposures; (19)
potential business disruptions, including those related to physical
security threats, information technology or cyber-attacks,
epidemics, sanctions or natural disasters; (20) work stoppages or
other labor disruptions; (21) substantial pension and other
postretirement benefit obligations; (22) potential environmental
liabilities.
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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Maurita Sutedja or Keely Moos (312) 544-2140 |
Communications: |
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Allison Bone (312) 544-2002 |
The Boeing Company
and Subsidiaries |
Consolidated
Statements of Operations |
(Unaudited) |
|
In the first quarter of 2018, we
adopted the following Accounting Standards Updates (ASU), which are
reflected in the unaudited Consolidated Financial Statements on
pages 8-14: ASU 2014-09, Revenue from Contracts with
Customers (Topic 606); ASU 2017-07, Compensation -
Retirement Benefits (Topic 715): Improving the Presentation of Net
Periodic Pension Cost and Net Periodic Postretirement Benefit
Cost; ASU 2016-18 Statement of Cash Flows (Topic 230)
Restricted Cash; and ASU 2018-02, Income
Statement—Reporting Comprehensive Income (Topic 220):
Reclassification of Certain Tax Effects from Accumulated Other
Comprehensive Income. |
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Twelve months
ended
December 31 |
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Three months
ended
December 31 |
(Dollars in millions, except per share
data) |
2018 |
|
2017 |
|
2018 |
|
2017 |
Sales of products |
$90,229 |
|
$83,740 |
|
$25,381 |
|
$22,073 |
Sales of services |
10,898 |
|
10,265 |
|
2,960 |
|
2,697 |
Total revenues |
101,127 |
|
94,005 |
|
28,341 |
|
24,770 |
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Cost of products |
(72,922) |
|
(68,879) |
|
(19,788) |
|
(17,943) |
Cost of services |
(8,499) |
|
(7,663) |
|
(2,284) |
|
(1,921) |
Boeing Capital interest expense |
(69) |
|
(70) |
|
(18) |
|
(17) |
Total costs and expenses |
(81,490) |
|
(76,612) |
|
(22,090) |
|
(19,881) |
|
19,637 |
|
17,393 |
|
6,251 |
|
4,889 |
Income/(loss) from operating investments, net |
111 |
|
204 |
|
(1) |
|
35 |
General and administrative expense |
(4,567) |
|
(4,095) |
|
(1,222) |
|
(1,205) |
Research and development expense, net |
(3,269) |
|
(3,179) |
|
(852) |
|
(762) |
Gain/(loss) on dispositions, net |
75 |
|
21 |
|
(1) |
|
21 |
Earnings from operations |
11,987 |
|
10,344 |
|
4,175 |
|
2,978 |
Other income, net |
92 |
|
123 |
|
29 |
|
32 |
Interest and debt expense |
(475) |
|
(360) |
|
(158) |
|
(93) |
Earnings before income taxes |
11,604 |
|
10,107 |
|
4,046 |
|
2,917 |
Income tax (expense)/benefit |
(1,144) |
|
(1,649) |
|
(622) |
|
403 |
Net earnings |
$10,460 |
|
$8,458 |
|
$3,424 |
|
$3,320 |
|
|
|
|
|
|
|
|
Basic earnings per share |
$18.05 |
|
$14.03 |
|
$6.00 |
|
$5.57 |
|
|
|
|
|
|
|
|
Diluted earnings per share |
$17.85 |
|
$13.85 |
|
$5.93 |
|
$5.49 |
|
|
|
|
|
|
|
|
Weighted average diluted shares
(millions) |
586.2 |
|
610.7 |
|
577.5 |
|
605.1 |
The Boeing Company
and Subsidiaries |
Consolidated
Statements of Financial Position |
(Unaudited) |
|
(Dollars in millions, except per share
data) |
December 31
2018 |
|
December 31
2017 |
Assets |
|
|
|
Cash and cash equivalents |
$7,637 |
|
$8,813 |
Short-term and other investments |
927 |
|
1,179 |
Accounts receivable, net |
3,879 |
|
2,894 |
Unbilled receivables, net |
10,025 |
|
8,194 |
Current portion of customer financing, net |
460 |
|
309 |
Inventories |
62,567 |
|
61,388 |
Other current assets |
2,335 |
|
2,417 |
Total current assets |
87,830 |
|
85,194 |
Customer financing, net |
2,418 |
|
2,756 |
Property, plant and equipment, net |
12,645 |
|
12,672 |
Goodwill |
7,840 |
|
5,559 |
Acquired intangible assets, net |
3,429 |
|
2,573 |
Deferred income taxes |
284 |
|
321 |
Investments |
1,087 |
|
1,260 |
Other assets, net of accumulated amortization of
$503 and $482 |
1,826 |
|
2,027 |
Total assets |
$117,359 |
|
$112,362 |
Liabilities and equity |
|
|
|
Accounts payable |
$12,916 |
|
$12,202 |
Accrued liabilities |
14,808 |
|
13,069 |
Advances and progress billings |
50,676 |
|
48,042 |
Short-term debt and current portion of long-term
debt |
3,190 |
|
1,335 |
Total current liabilities |
81,590 |
|
74,648 |
Deferred income taxes |
1,736 |
|
2,188 |
Accrued retiree health care |
4,584 |
|
5,545 |
Accrued pension plan liability, net |
15,323 |
|
16,471 |
Other long-term liabilities |
3,059 |
|
2,015 |
Long-term debt |
10,657 |
|
9,782 |
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 |
6,768 |
|
6,804 |
Treasury stock, at cost |
(52,348) |
|
(43,454) |
Retained earnings |
55,941 |
|
49,618 |
Accumulated other comprehensive loss |
(15,083) |
|
(16,373) |
Total shareholders' equity |
339 |
|
1,656 |
Noncontrolling interests |
71 |
|
57 |
Total equity |
410 |
|
1,713 |
Total liabilities and equity |
$117,359 |
|
$112,362 |
The Boeing Company
and Subsidiaries |
Consolidated
Statements of Cash Flows |
(Unaudited) |
|
|
Twelve months
ended
December 31 |
(Dollars in millions) |
2018 |
|
2017 |
Cash flows – operating
activities: |
|
|
|
Net earnings |
$10,460 |
|
$8,458 |
Adjustments to reconcile net earnings to net cash
provided by operating activities: |
|
|
|
Non-cash items – |
|
|
|
Share-based plans expense |
202 |
|
202 |
Depreciation and amortization |
2,114 |
|
2,047 |
Investment/asset impairment charges, net |
93 |
|
113 |
Customer financing valuation
(benefit)/expense |
(3) |
|
2 |
(Gain)/loss on dispositions, net |
(75) |
|
(21) |
Other charges and credits, net |
247 |
|
293 |
Changes in assets and liabilities – |
|
|
|
Accounts receivable |
(795) |
|
(840) |
Unbilled receivables |
(1,826) |
|
(1,600) |
Advances and progress billings |
2,636 |
|
4,700 |
Inventories |
568 |
|
(1,403) |
Other current assets |
98 |
|
(19) |
Accounts payable |
2 |
|
130 |
Accrued liabilities |
1,117 |
|
335 |
Income taxes receivable, payable and deferred |
(180) |
|
656 |
Other long-term liabilities |
87 |
|
94 |
Pension and other postretirement plans |
(153) |
|
(582) |
Customer financing, net |
120 |
|
1,041 |
Other |
610 |
|
(260) |
Net cash provided by operating
activities |
15,322 |
|
13,346 |
Cash flows – investing activities: |
|
|
|
Property, plant and equipment additions |
(1,722) |
|
(1,739) |
Property, plant and equipment reductions |
120 |
|
92 |
Acquisitions, net of cash acquired |
(3,230) |
|
(324) |
Contributions to investments |
(2,607) |
|
(3,569) |
Proceeds from investments |
2,898 |
|
3,607 |
Purchase of distribution rights |
(69) |
|
(131) |
Other |
(11) |
|
6 |
Net cash used by investing activities |
(4,621) |
|
(2,058) |
Cash flows – financing activities: |
|
|
|
New borrowings |
8,548 |
|
2,077 |
Debt repayments |
(7,183) |
|
(953) |
Contributions from noncontrolling interests |
35 |
|
|
Stock options exercised |
81 |
|
311 |
Employee taxes on certain share-based payment
arrangements |
(257) |
|
(132) |
Common shares repurchased |
(9,000) |
|
(9,236) |
Dividends paid |
(3,946) |
|
(3,417) |
Net cash used by financing activities |
(11,722) |
|
(11,350) |
Effect of exchange rate changes on cash and cash
equivalents, including restricted |
(53) |
|
80 |
Net (decrease) / increase in cash & cash
equivalents, including restricted |
(1,074) |
|
18 |
Cash & cash equivalents, including restricted,
at beginning of year |
8,887 |
|
8,869 |
Cash & cash equivalents, including
restricted, at end of period |
7,813 |
|
8,887 |
Less restricted cash & cash equivalents,
included in Investments |
176 |
|
74 |
Cash and cash equivalents at end of
period |
$7,637 |
|
$8,813 |
The Boeing Company
and Subsidiaries |
Summary of Business
Segment Data |
(Unaudited) |
|
|
Twelve months
ended
December 31 |
|
Three months
ended
December 31 |
(Dollars in millions) |
2018 |
|
2017 |
|
2018 |
|
2017 |
Revenues: |
|
|
|
|
|
|
|
Commercial Airplanes |
$60,715 |
|
$58,014 |
|
$17,306 |
|
$15,388 |
Defense, Space & Security |
23,195 |
|
20,561 |
|
6,111 |
|
5,257 |
Global Services |
17,018 |
|
14,581 |
|
4,894 |
|
3,797 |
Boeing Capital |
274 |
|
307 |
|
60 |
|
73 |
Unallocated items, eliminations and other |
(75) |
|
542 |
|
(30) |
|
255 |
Total revenues |
$101,127 |
|
$94,005 |
|
$28,341 |
|
$24,770 |
Earnings from operations: |
|
|
|
|
|
|
|
Commercial Airplanes |
$7,879 |
|
$5,452 |
|
$2,704 |
|
$1,787 |
Defense, Space & Security |
1,594 |
|
2,193 |
|
669 |
|
544 |
Global Services |
2,522 |
|
2,246 |
|
732 |
|
559 |
Boeing Capital |
79 |
|
114 |
|
8 |
|
27 |
Segment operating profit |
12,074 |
|
10,005 |
|
4,113 |
|
2,917 |
Unallocated items, eliminations and other |
(1,414) |
|
(1,099) |
|
(246) |
|
(328) |
FAS/CAS service cost adjustment |
1,327 |
|
1,438 |
|
308 |
|
389 |
Earnings from operations |
11,987 |
|
10,344 |
|
4,175 |
|
2,978 |
Other income/(loss), net |
92 |
|
123 |
|
29 |
|
32 |
Interest and debt expense |
(475) |
|
(360) |
|
(158) |
|
(93) |
Earnings before income taxes |
11,604 |
|
10,107 |
|
4,046 |
|
2,917 |
Income tax expense |
(1,144) |
|
(1,649) |
|
(622) |
|
403 |
Net earnings |
$10,460 |
|
$8,458 |
|
$3,424 |
|
$3,320 |
|
|
|
|
|
|
|
|
Research and development expense, net: |
|
|
|
|
|
|
|
Commercial Airplanes |
$2,188 |
|
$2,247 |
|
$572 |
|
$492 |
Defense, Space & Security |
788 |
|
834 |
|
175 |
|
235 |
Global Services |
161 |
|
140 |
|
42 |
|
39 |
Other |
132 |
|
(42) |
|
63 |
|
(4) |
Total research and development expense,
net |
$3,269 |
|
$3,179 |
|
$852 |
|
$762 |
|
|
|
|
|
|
|
|
Unallocated items, eliminations and
other: |
|
|
|
|
|
|
|
Share-based plans |
($76) |
|
($77) |
|
($16) |
|
($10) |
Deferred compensation |
(19) |
|
(240) |
|
93 |
|
(66) |
Amortization of previously capitalized
interest |
(92) |
|
(96) |
|
(25) |
|
(28) |
Eliminations and other unallocated items |
(1,227) |
|
(686) |
|
(298) |
|
(224) |
Sub-total (included in core operating
earnings) |
(1,414) |
|
(1,099) |
|
(246) |
|
(328) |
Pension FAS/CAS service cost adjustment |
1,005 |
|
1,127 |
|
225 |
|
316 |
Postretirement FAS/CAS service cost
adjustment |
322 |
|
311 |
|
83 |
|
73 |
FAS/CAS service cost adjustment |
$1,327 |
|
$1,438 |
|
$308 |
|
$389 |
Total |
($87) |
|
$339 |
|
$62 |
|
$61 |
The Boeing Company
and Subsidiaries |
Operating and
Financial Data |
(Unaudited) |
|
Deliveries |
Twelve months
ended
December 31 |
|
Three months
ended
December 31 |
Commercial Airplanes |
2018 |
|
2017 |
|
2018 |
|
2017 |
737 |
580 |
|
529 |
|
173 |
|
148 |
747 |
6 |
|
14 |
(1) |
1 |
|
6 |
767 |
27 |
|
10 |
|
14 |
|
3 |
777 |
48 |
|
74 |
|
11 |
|
16 |
787 |
145 |
|
136 |
|
39 |
|
36 |
Total |
806 |
|
763 |
|
238 |
|
209 |
Note: Aircraft accounted for as
revenues by BCA and as a note receivable in consolidation
identified by parentheses |
|
|
|
|
|
|
|
|
Defense, Space & Security |
|
|
|
|
|
|
|
AH-64 Apache (New) |
— |
|
11 |
|
— |
|
3 |
AH-64 Apache (Remanufactured) |
23 |
|
57 |
|
11 |
|
14 |
CH-47 Chinook (New) |
13 |
|
9 |
|
2 |
|
3 |
CH-47 Chinook (Renewed) |
17 |
|
35 |
|
3 |
|
7 |
F-15 Models |
10 |
|
16 |
|
2 |
|
5 |
F/A-18 Models |
17 |
|
23 |
|
7 |
|
5 |
P-8 Models |
16 |
|
19 |
|
6 |
|
5 |
Commercial and Civil Satellites |
1 |
|
3 |
|
— |
|
— |
Military Satellites |
1 |
|
1 |
|
1 |
|
1 |
|
|
Total backlog (Dollars in
millions) |
December 31
2018 |
|
December 31
2017 |
Commercial Airplanes |
$412,307 |
|
$410,986 |
Defense, Space & Security |
57,166 |
|
44,049 |
Global Services |
21,008 |
|
19,605 |
Total backlog |
$490,481 |
|
$474,640 |
|
|
|
|
Contractual backlog |
$462,070 |
|
$456,984 |
Unobligated backlog |
28,411 |
|
17,656 |
Total backlog |
$490,481 |
|
$474,640 |
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) |
Fourth Quarter
2018 |
|
Fourth Quarter
2017 |
|
$ millions |
|
Per Share |
|
$ millions |
|
Per Share |
Revenues |
28,341 |
|
|
|
24,770 |
|
|
Earnings from operations (GAAP) |
4,175 |
|
|
|
2,978 |
|
|
Operating margins |
14.7% |
|
|
|
12.0% |
|
|
|
|
|
|
|
|
|
|
FAS/CAS service cost adjustment: |
|
|
|
|
|
|
|
Pension FAS/CAS service cost adjustment |
(225) |
|
|
|
(316) |
|
|
Postretirement FAS/CAS service cost
adjustment |
(83) |
|
|
|
(73) |
|
|
FAS/CAS service cost adjustment |
(308) |
|
|
|
(389) |
|
|
Core operating earnings (non-GAAP) |
$3,867 |
|
|
|
$2,589 |
|
|
Core operating margins (non-GAAP) |
13.6% |
|
|
|
10.5% |
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share (GAAP) |
|
|
$5.93 |
|
|
|
$5.49 |
Pension FAS/CAS service cost adjustment |
($225) |
|
(0.39) |
|
($316) |
|
(0.52) |
Postretirement FAS/CAS service cost
adjustment |
(83) |
|
(0.14) |
|
(73) |
|
(0.12) |
Non-operating pension expense |
(45) |
|
(0.08) |
|
(29) |
|
(0.05) |
Non-operating postretirement expense |
24 |
|
0.04 |
|
32 |
|
0.05 |
Provision for deferred income taxes on
adjustments 1 |
69 |
|
0.12 |
|
135 |
|
0.22 |
Subtotal of adjustments |
($260) |
|
($0.45) |
|
($251) |
|
($0.42) |
Core earnings per share (non-GAAP) |
|
|
$5.48 |
|
|
|
$5.07 |
|
|
|
|
|
|
|
|
Weighted average diluted shares (in
millions) |
|
|
577.5 |
|
|
|
605.1 |
|
1 The income tax
impact is calculated using the U.S. corporate statutory tax
rate. |
|
|
|
|
|
|
|
|
|
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) |
2019
Guidance |
|
Full Year
2018 |
|
Full Year 2017 |
|
$ millions |
Per Share |
|
$ millions |
|
Per Share |
|
$ millions |
|
Per Share |
Revenues |
|
|
|
101,127 |
|
|
|
94,005 |
|
|
Earnings from operations (GAAP) |
|
|
|
11,987 |
|
|
|
10,344 |
|
|
Operating margins |
|
|
|
11.9% |
|
|
|
11.0% |
|
|
|
FAS/CAS service cost adjustment: |
|
|
|
|
|
|
|
|
Pension FAS/CAS service cost adjustment |
|
|
|
(1,005) |
|
|
|
(1,127) |
|
|
Postretirement FAS/CAS service cost
adjustment |
|
|
|
(322) |
|
|
|
(311) |
|
|
FAS/CAS service cost adjustment |
~($1,335) |
|
|
(1,327) |
|
|
|
(1,438) |
|
|
Core operating earnings (non-GAAP) |
|
|
|
$10,660 |
|
|
|
$8,906 |
|
|
Core operating margins (non-GAAP) |
|
|
|
10.5% |
|
|
|
9.5% |
|
|
|
Diluted earnings per share (GAAP) |
|
$21.90 - 22.10 |
|
|
$17.85 |
|
|
$13.85 |
Pension FAS/CAS service cost adjustment |
~($1,335) |
|
|
($1,005) |
|
(1.71) |
|
($1,127) |
|
(1.84) |
Postretirement FAS/CAS service cost
adjustment |
|
|
(322) |
|
(0.55) |
|
(311) |
|
(0.51) |
Non-operating pension expense |
~($90) |
|
|
(143) |
|
(0.24) |
|
(117) |
|
(0.19) |
Non-operating postretirement expense |
|
|
101 |
|
0.17 |
|
123 |
|
0.20 |
Provision for deferred income taxes on
adjustments 1 |
|
|
|
287 |
|
0.49 |
|
501 |
|
0.82 |
Subtotal of adjustments |
|
($2.00) |
|
($1,082) |
|
($1.84) |
|
($931) |
|
($1.52) |
Core earnings per share (non-GAAP) |
|
$19.90 - 20.10 |
|
|
$16.01 |
|
|
$12.33 |
|
Weighted average diluted shares (in
millions) |
560 - 565 |
|
|
|
586.2 |
|
|
610.7 |
|
1 The income tax
impact is calculated using the U.S. corporate statutory tax
rate. |
|
|
|
|
|
|
|
|
|
|
|
|
The Boeing Company
and Subsidiaries |
Summary of Business
Segment Data - Restated |
(Unaudited) |
|
The restated amounts below reflect
the change in accounting for military derivative aircraft as well
as the realignment of certain programs between Global Services and
Defense, Space & Security. |
|
(Dollars in millions) |
2018 |
|
Q4 2018 |
|
Q3 2018 |
|
Q2 2018 |
|
Q1 2018 |
|
2017 |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
Commercial Airplanes |
$57,499 |
|
$16,531 |
|
$14,071 |
|
$13,952 |
|
$12,945 |
|
$54,612 |
Defense, Space & Security |
26,392 |
|
6,874 |
|
6,937 |
|
6,100 |
|
6,481 |
|
23,938 |
Global Services |
17,056 |
|
4,908 |
|
4,101 |
|
4,097 |
|
3,950 |
|
14,611 |
Boeing Capital |
274 |
|
60 |
|
77 |
|
72 |
|
65 |
|
307 |
Unallocated items, eliminations and other |
(94) |
|
(32) |
|
(40) |
|
37 |
|
(59) |
|
537 |
Total revenues |
101,127 |
|
28,341 |
|
25,146 |
|
24,258 |
|
23,382 |
|
94,005 |
Earnings from operations: |
|
|
|
|
|
|
|
|
|
|
|
Commercial Airplanes |
7,830 |
|
2,600 |
|
2,033 |
|
1,785 |
|
1,412 |
|
5,285 |
Defense, Space & Security |
1,657 |
|
771 |
|
(247) |
|
376 |
|
757 |
|
2,383 |
Global Services |
2,536 |
|
737 |
|
548 |
|
604 |
|
647 |
|
2,251 |
Boeing Capital |
79 |
|
8 |
|
27 |
|
24 |
|
20 |
|
114 |
Segment operating profit |
12,102 |
|
4,116 |
|
2,361 |
|
2,789 |
|
2,836 |
|
10,033 |
Unallocated items, eliminations and other |
(1,442) |
|
(249) |
|
(471) |
|
(396) |
|
(326) |
|
(1,127) |
FAS/CAS service cost adjustment |
1,327 |
|
308 |
|
337 |
|
317 |
|
365 |
|
1,438 |
Earnings from operations |
11,987 |
|
4,175 |
|
2,227 |
|
2,710 |
|
2,875 |
|
10,344 |
Other income/(loss), net |
92 |
|
29 |
|
12 |
|
(15) |
|
66 |
|
123 |
Interest and debt expense |
(475) |
|
(158) |
|
(106) |
|
(109) |
|
(102) |
|
(360) |
Earnings before income taxes |
11,604 |
|
4,046 |
|
2,133 |
|
2,586 |
|
2,839 |
|
10,107 |
Income tax (expense)/benefit |
(1,144) |
|
(622) |
|
230 |
|
(390) |
|
(362) |
|
(1,649) |
Net earnings |
$10,460 |
|
$3,424 |
|
$2,363 |
|
$2,196 |
|
$2,477 |
|
$8,458 |