Boeing Reports
Third-Quarter Results
CHICAGO, Oct. 23, 2019 /PRNewswire/ --
- Continue to engage global regulators and customers on safe
return to service of the 737 MAX
- Revenue of $20.0 billion
reflecting lower 737 deliveries and higher defense and services
volume
- GAAP EPS of $2.05 and core EPS
(non-GAAP)* of $1.45 per
share
- Operating cash flow of ($2.4) billion; paid $1.2 billion of dividends
- Total backlog of $470 billion,
including nearly 5,500 commercial airplanes
- Cash and marketable securities of $10.9 billion provide strong liquidity
Table 1. Summary Financial Results |
Third
Quarter |
|
|
|
Nine Months |
|
|
(Dollars in Millions, except per share
data) |
2019 |
|
2018 |
|
Change |
|
2019 |
|
2018 |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
$19,980 |
|
$25,146 |
|
(21)% |
|
$58,648 |
|
$72,786 |
|
(19)% |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP |
|
|
|
|
|
|
|
|
|
|
|
Earnings From Operations |
$1,259 |
|
$2,227 |
|
(43)% |
|
$229 |
|
$7,812 |
|
(97)% |
Operating Margin |
6.3% |
|
8.9% |
|
(2.6) Pts |
|
0.4% |
|
10.7% |
|
(10.3) Pts |
Net Earnings |
$1,167 |
|
$2,363 |
|
(51)% |
|
$374 |
|
$7,036 |
|
(95)% |
Earnings Per Share |
$2.05 |
|
$4.07 |
|
(50)% |
|
$0.66 |
|
$11.95 |
|
(94)% |
Operating Cash Flow |
($2,424) |
|
$4,559 |
|
NM |
|
($226) |
|
$12,375 |
|
NM |
Non-GAAP* |
|
|
|
|
|
|
|
|
|
|
|
Core Operating Earnings/(Loss) |
$895 |
|
$1,890 |
|
(53)% |
|
($864) |
|
$6,793 |
|
NM |
Core Operating Margin |
4.5% |
|
7.5% |
|
(3.0) Pts |
|
(1.5)% |
|
9.3% |
|
(10.8) Pts |
Core Earnings/(Loss) Per Share |
$1.45 |
|
$3.58 |
|
(59)% |
|
($1.13) |
|
$10.55 |
|
NM |
|
*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 third-quarter revenue of
$20.0 billion, GAAP earnings per
share of $2.05 and core earnings per
share (non-GAAP)* of $1.45,
reflecting lower 737 deliveries partially offset by higher defense
and services volume (Table 1). Boeing recorded operating cash flow
of ($2.4) billion and paid
$1.2 billion of dividends.
Boeing has developed software and training updates for the 737
MAX and continues to work with the FAA and global civil aviation
authorities to complete remaining steps toward certification and
readiness for return to service. These regulatory authorities will
determine the timing and conditions of return to service in each
relevant jurisdiction. For purposes of the third-quarter results,
the company has assumed that regulatory approval of the 737 MAX
return to service begins in the fourth quarter of 2019 and that it
will gradually increase the 737 production rate from 42 per month
to 57 per month by late 2020.
"Our top priority remains the safe return to service of the 737
MAX, and we're making steady progress," said Boeing President and
Chief Executive Officer Dennis
Muilenburg. "We've also taken action to further sharpen our
company's focus on product and services safety, and we continue to
deliver on customer commitments and capture new opportunities with
our values of safety, quality and integrity always at the
forefront."
Table 2. Cash Flow |
Third
Quarter |
|
Nine Months |
(Millions) |
2019 |
|
2018 |
|
2019 |
|
2018 |
Operating Cash Flow |
($2,424) |
|
$4,559 |
|
($226) |
|
$12,375 |
Less Additions to Property, Plant &
Equipment |
($465) |
|
($457) |
|
($1,387) |
|
($1,227) |
Free Cash Flow* |
($2,889) |
|
$4,102 |
|
($1,613) |
|
$11,148 |
|
*Non-GAAP measure; complete
definitions of Boeing's non-GAAP measures are on page 6, "Non-GAAP
Measures Disclosures." |
Operating cash flow was ($2.4)
billion in the quarter, primarily reflecting lower 737
delivery and advance payments as well as timing of receipts and
expenditures (Table 2). During the quarter, the company paid
$1.2 billion of dividends, reflecting
a 20 percent increase in dividends per share compared to the same
period of the prior year.
Table 3. Cash, Marketable Securities and Debt
Balances |
Quarter-End |
(Billions) |
Q3 19 |
|
Q2 19 |
Cash |
$9.8 |
|
$9.2 |
Marketable Securities1 |
$1.1 |
|
$0.4 |
Total |
$10.9 |
|
$9.6 |
Debt Balances: |
|
|
|
The Boeing Company, net of intercompany loans to
BCC |
$22.8 |
|
$17.3 |
Boeing Capital, including intercompany loans |
$1.9 |
|
$1.9 |
Total Consolidated Debt |
$24.7 |
|
$19.2 |
|
1 Marketable securities
consists primarily of time deposits due within one year classified
as "short-term investments." |
Cash and investments in marketable securities totaled
$10.9 billion, compared to
$9.6 billion at the beginning of the
quarter (Table 3). Debt was $24.7
billion, up from $19.2 billion
at the beginning of the quarter primarily due to the issuance of
new debt.
Total company backlog at quarter-end was $470 billion and included net orders of
$16 billion.
Segment Results
Commercial Airplanes
Table 4. Commercial Airplanes |
Third
Quarter |
|
|
|
Nine Months |
|
|
(Dollars in Millions) |
2019 |
|
2018 |
|
Change |
|
2019 |
|
2018 |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Airplanes Deliveries |
62 |
|
190 |
|
(67)% |
|
301 |
|
568 |
|
(47)% |
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
$8,249 |
|
$14,071 |
|
(41)% |
|
$24,793 |
|
$40,968 |
|
(39)% |
(Loss)/Earnings from Operations |
($40) |
|
$2,033 |
|
NM |
|
($3,813) |
|
$5,230 |
|
NM |
Operating Margin |
(0.5)% |
|
14.4% |
|
(14.9) Pts |
|
(15.4)% |
|
12.8% |
|
NM |
Commercial Airplanes third-quarter revenue was $8.2 billion reflecting lower 737 deliveries
(Table 4). Third-quarter operating margin decreased to (0.5)
percent reflecting lower 737 deliveries partially offset by a
higher margin on the 787 program. During the quarter estimated
costs to produce 737 aircraft included in the accounting quantity
increased by $0.9 billion primarily
to reflect current assumptions regarding timing of return to
service and the timing of planned production rate increases. There
was no significant change to estimated potential concessions and
other considerations to customers related to the 737 MAX
grounding.
Commercial Airplanes delivered 62 airplanes during the quarter.
Given the current global trade environment, the 787 production rate
will be reduced to 12 airplanes per month for approximately two
years beginning in late 2020. The 777X program is progressing
through pre-flight testing and remains on track for first flight in
early 2020. The company is now targeting early 2021 for first
delivery of the 777X.
Commercial Airplanes booked net orders worth $5 billion during the quarter, including orders
for twenty 787 airplanes for Korean Air, eight 787 airplanes for
Air New Zealand, and six 777 freighters for China Airlines.
Commercial Airplanes backlog included nearly 5,500 airplanes valued
at $387 billion.
Defense, Space & Security
Table 5. Defense, Space & Security |
Third
Quarter |
|
|
|
Nine Months |
|
|
(Dollars in Millions) |
2019 |
|
2018 |
|
Change |
|
2019 |
|
2018 |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
$7,042 |
|
$6,937 |
|
2% |
|
$20,265 |
|
$19,518 |
|
4% |
Earnings/(Loss) from Operations |
$755 |
|
($247) |
|
NM |
|
$2,577 |
|
$886 |
|
191% |
Operating Margin |
10.7% |
|
(3.6)% |
|
14.3 Pts |
|
12.7% |
|
4.5% |
|
8.2 Pts |
Defense, Space & Security third-quarter revenue increased to
$7.0 billion primarily driven by
higher volume on satellites, weapons, and T-7A Red Hawk (formerly T-X Trainer), partially
offset by lower volume on F-15 (Table 5). Third-quarter operating
margin increased to 10.7 percent primarily due to the absence of
third quarter 2018 charges and improved performance.
During the quarter, Defense, Space & Security received
contracts for the fifth production lot for 15 KC-46A Tanker
aircraft for the U.S. Air Force and nine AH-64E Apache helicopters
for the U.S. Army. Significant milestones achieved during the
quarter included completion of the first test flight of the MQ-25
unmanned aerial refueler, first flight of the inaugural P-8A
Poseidon aircraft for the United Kingdom Royal Air Force, and final
assembly of the Space Launch System core stage structure. Defense,
Space & Security also performed the 100th test flight of the
T-7A Red Hawk.
Backlog at Defense, Space & Security was $62 billion, of which 30 percent represents
orders from customers outside the U.S.
Global Services
Table 6. Global Services |
Third
Quarter |
|
|
|
Nine Months |
|
|
(Dollars in Millions) |
2019 |
|
2018 |
|
Change |
|
2019 |
|
2018 |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
$4,658 |
|
$4,101 |
|
14% |
|
$13,820 |
|
$12,148 |
|
14% |
Earnings from Operations |
$673 |
|
$548 |
|
23% |
|
$2,013 |
|
$1,799 |
|
12% |
Operating Margin |
14.4% |
|
13.4% |
|
1.0 Pts |
|
14.6% |
|
14.8% |
|
(0.2) Pts |
Global Services third-quarter revenue increased to $4.7 billion, primarily driven by the acquisition
of Boeing Distribution Services, Inc. (formerly KLX) and higher
government services volume (Table 6). Third-quarter operating
margin increased to 14.4 percent primarily due to improved
performance.
During the quarter, Global Services was awarded contracts with
the U.S. Air Force for F-15 training to Qatar, A-10 Thunderbolt II re-winging, and
KC-46A Tanker Lot 5 services. Global Services also signed an
agreement with IndiGo for digital solutions and delivered the first
SpiceXpress 737-800 Boeing Converted Freighter following
India certification.
Additional Financial Information
Table 7. Additional Financial
Information |
Third
Quarter |
|
Nine Months |
(Dollars in Millions) |
2019 |
|
2018 |
|
2019 |
|
2018 |
Revenues |
|
|
|
|
|
|
|
Boeing Capital |
$66 |
|
$77 |
|
$207 |
|
$214 |
Unallocated items, eliminations and other |
($35) |
|
($40) |
|
($437) |
|
($62) |
Earnings from Operations |
|
|
|
|
|
|
|
Boeing Capital |
$29 |
|
$27 |
|
$86 |
|
$71 |
FAS/CAS service cost adjustment |
$364 |
|
$337 |
|
$1,093 |
|
$1,019 |
Other unallocated items and eliminations |
($522) |
|
($471) |
|
($1,727) |
|
($1,193) |
Other income, net |
$121 |
|
$12 |
|
$334 |
|
$63 |
Interest and debt expense |
($203) |
|
($106) |
|
($480) |
|
($317) |
Effective tax rate |
0.8% |
|
(10.8)% |
|
(350.6)% |
|
6.9% |
At quarter-end, Boeing Capital's net portfolio balance was
$2.2 billion. The change in earnings
from other unallocated items and eliminations is primarily due to
increased enterprise research and development investment. Interest
and debt expense increased due to higher debt balances. The
effective tax rate for the third quarter increased from the same
period in the prior year primarily due to a $412 million benefit related to a 2013-2014 tax
settlement that was recorded in the third quarter of 2018,
partially offset by larger 2019 tax rate benefits resulting from
lower pre-tax earnings.
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
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/(loss) expressed as a percentage
of revenue. Core earnings/(loss) 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/(loss), core operating margin and core earnings/(loss) per
share for purposes of evaluating and forecasting underlying
business performance. Management believes these core
earnings/(loss) 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 page 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 of free cash flow to GAAP operating 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) the
timing and conditions surrounding the return to service of the 737
MAX fleet; (2) general conditions in the economy and our industry,
including those due to regulatory changes; (3) our reliance on our
commercial airline customers; (4) 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; (5) changing budget and appropriation
levels and acquisition priorities of the U.S. government; (6) our
dependence on U.S. government contracts; (7) our reliance on
fixed-price contracts; (8) our reliance on cost-type contracts; (9)
uncertainties concerning contracts that include in-orbit incentive
payments; (10) our dependence on our subcontractors and suppliers,
as well as the availability of raw materials; (11) changes in
accounting estimates; (12) changes in the competitive landscape in
our markets; (13) our non-U.S. operations, including sales to
non-U.S. customers; (14) threats to the security of our or our
customers' information; (15) potential adverse developments in new
or pending litigation and/or government investigations; (16)
customer and aircraft concentration in our customer financing
portfolio; (17) changes in our ability to obtain debt on
commercially reasonable terms and at competitive rates; (18)
realizing the anticipated benefits of mergers, acquisitions, joint
ventures/strategic alliances or divestitures; (19) the adequacy of
our insurance coverage to cover significant risk exposures; (20)
potential business disruptions, including those related to physical
security threats, information technology or cyber-attacks,
epidemics, sanctions or natural disasters; (21) work stoppages or
other labor disruptions; (22) substantial pension and other
postretirement benefit obligations; and (23) 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:
Investor Relations: Maurita Sutedja or Keely Moos (312) 544-2140
Communications: Caroline Hutcheson
(312) 544-2002
The Boeing Company
and Subsidiaries |
Consolidated
Statements of Operations |
(Unaudited) |
|
|
Nine months
ended
September 30 |
|
Three months
ended
September 30 |
(Dollars in millions, except per share
data) |
2019 |
|
2018 |
|
2019 |
|
2018 |
Sales of products |
$50,514 |
|
$64,848 |
|
$17,195 |
|
$22,463 |
Sales of services |
8,134 |
|
7,938 |
|
2,785 |
|
2,683 |
Total revenues |
58,648 |
|
72,786 |
|
19,980 |
|
25,146 |
|
|
|
|
|
|
|
|
Cost of products |
(46,584) |
|
(53,134) |
|
(14,674) |
|
(18,882) |
Cost of services |
(6,752) |
|
(6,215) |
|
(2,241) |
|
(2,140) |
Boeing Capital interest expense |
(49) |
|
(51) |
|
(15) |
|
(18) |
Total costs and expenses |
(53,385) |
|
(59,400) |
|
(16,930) |
|
(21,040) |
|
5,263 |
|
13,386 |
|
3,050 |
|
4,106 |
(Loss)/income from operating investments, net |
(3) |
|
112 |
|
(8) |
|
32 |
General and administrative expense |
(2,857) |
|
(3,345) |
|
(1,001) |
|
(1,154) |
Research and development expense, net |
(2,470) |
|
(2,417) |
|
(778) |
|
(826) |
Gain/(loss) on dispositions, net |
296 |
|
76 |
|
(4) |
|
69 |
Earnings from operations |
229 |
|
7,812 |
|
1,259 |
|
2,227 |
Other income |
334 |
|
63 |
|
121 |
|
12 |
Interest and debt expense |
(480) |
|
(317) |
|
(203) |
|
(106) |
Earnings before income taxes |
83 |
|
7,558 |
|
1,177 |
|
2,133 |
Income tax benefit/(expense) |
291 |
|
(522) |
|
(10) |
|
230 |
Net earnings |
$374 |
|
$7,036 |
|
$1,167 |
|
$2,363 |
|
|
|
|
|
|
|
|
Basic earnings per share |
$0.66 |
|
$12.08 |
|
$2.07 |
|
$4.11 |
|
|
|
|
|
|
|
|
Diluted earnings per share |
$0.66 |
|
$11.95 |
|
$2.05 |
|
$4.07 |
|
|
|
|
|
|
|
|
Weighted average diluted shares
(millions) |
570.4 |
|
588.9 |
|
569.2 |
|
580.8 |
The Boeing Company
and Subsidiaries |
Consolidated
Statements of Financial Position |
(Unaudited) |
|
(Dollars in millions, except per share
data) |
September 30
2019 |
|
December 31
2018 |
Assets |
|
|
|
Cash and cash equivalents |
$9,763 |
|
$7,637 |
Short-term and other investments |
1,150 |
|
927 |
Accounts receivable, net |
3,564 |
|
3,879 |
Unbilled receivables, net |
11,078 |
|
10,025 |
Current portion of customer financing, net |
166 |
|
460 |
Inventories |
73,279 |
|
62,567 |
Other current assets |
2,656 |
|
2,335 |
Total current assets |
101,656 |
|
87,830 |
Customer financing, net |
2,077 |
|
2,418 |
Property, plant and equipment, net of accumulated
depreciation of $19,125 and $18,568 |
12,527 |
|
12,645 |
Goodwill |
8,063 |
|
7,840 |
Acquired intangible assets, net |
3,587 |
|
3,429 |
Deferred income taxes |
296 |
|
284 |
Investments |
1,117 |
|
1,087 |
Other assets, net of accumulated amortization of
$561 and $503 |
3,275 |
|
1,826 |
Total assets |
$132,598 |
|
$117,359 |
Liabilities and equity |
|
|
|
Accounts payable |
$15,101 |
|
$12,916 |
Accrued liabilities |
19,224 |
|
14,808 |
Advances and progress billings |
53,167 |
|
50,676 |
Short-term debt and current portion of long-term
debt |
4,354 |
|
3,190 |
Total current liabilities |
91,846 |
|
81,590 |
Deferred income taxes |
1,615 |
|
1,736 |
Accrued retiree health care |
4,437 |
|
4,584 |
Accrued pension plan liability, net |
14,590 |
|
15,323 |
Other long-term liabilities |
3,621 |
|
3,059 |
Long-term debt |
20,298 |
|
10,657 |
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 |
6,688 |
|
6,768 |
Treasury stock, at cost - 449,472,403 and
444,619,970 shares |
(54,924) |
|
(52,348) |
Retained earnings |
53,986 |
|
55,941 |
Accumulated other comprehensive loss |
(14,927) |
|
(15,083) |
Total shareholders' equity |
(4,116) |
|
339 |
Noncontrolling interests |
307 |
|
71 |
Total equity |
(3,809) |
|
410 |
Total liabilities and equity |
$132,598 |
|
$117,359 |
The Boeing Company
and Subsidiaries |
Consolidated
Statements of Cash Flows |
(Unaudited) |
|
|
Nine months
ended
September 30 |
(Dollars in millions) |
2019 |
|
2018 |
Cash flows – operating
activities: |
|
|
|
Net earnings |
$374 |
|
$7,036 |
Adjustments to reconcile net earnings to net cash
provided by operating activities: |
|
|
|
Non-cash items – |
|
|
|
Share-based plans expense |
160 |
|
150 |
Depreciation and amortization |
1,643 |
|
1,531 |
Investment/asset impairment charges, net |
106 |
|
63 |
Customer financing valuation adjustments |
249 |
|
(3) |
Gain on dispositions, net |
(296) |
|
(76) |
Other charges and credits, net |
190 |
|
158 |
Changes in assets and liabilities – |
|
|
|
Accounts receivable |
315 |
|
10 |
Unbilled receivables |
(1,053) |
|
(1,732) |
Advances and progress billings |
2,355 |
|
3,457 |
Inventories |
(9,565) |
|
(173) |
Other current assets |
(224) |
|
(5) |
Accounts payable |
1,626 |
|
1,181 |
Accrued liabilities |
5,495 |
|
890 |
Income taxes receivable, payable and deferred |
(989) |
|
(252) |
Other long-term liabilities |
(577) |
|
1 |
Pension and other postretirement plans |
(570) |
|
(89) |
Customer financing, net |
391 |
|
(175) |
Other |
144 |
|
403 |
Net cash (used)/provided by operating
activities |
(226) |
|
12,375 |
Cash flows – investing activities: |
|
|
|
Property, plant and equipment additions |
(1,387) |
|
(1,227) |
Property, plant and equipment reductions |
334 |
|
117 |
Acquisitions, net of cash acquired |
(492) |
|
(250) |
Contributions to investments |
(1,439) |
|
(2,145) |
Proceeds from investments |
967 |
|
1,369 |
Purchase of distribution rights |
(20) |
|
(56) |
Other |
(10) |
|
(5) |
Net cash used by investing activities |
(2,047) |
|
(2,197) |
Cash flows – financing activities: |
|
|
|
New borrowings |
19,621 |
|
4,696 |
Debt repayments |
(8,978) |
|
(4,029) |
Contributions from noncontrolling interests |
7 |
|
35 |
Stock options exercised |
51 |
|
70 |
Employee taxes on certain share-based payment
arrangements |
(241) |
|
(247) |
Common shares repurchased |
(2,651) |
|
(8,415) |
Dividends paid |
(3,473) |
|
(2,976) |
Net cash provided/(used) by financing
activities |
4,336 |
|
(10,866) |
Effect of exchange rate changes on cash and cash
equivalents, including restricted |
(27) |
|
(37) |
Net increase/(decrease) in cash & cash
equivalents, including restricted |
2,036 |
|
(725) |
Cash & cash equivalents, including restricted,
at beginning of year |
7,813 |
|
8,887 |
Cash & cash equivalents, including
restricted, at end of period |
9,849 |
|
8,162 |
Less restricted cash & cash equivalents,
included in Investments |
86 |
|
128 |
Cash and cash equivalents at end of
period |
$9,763 |
|
$8,034 |
The Boeing Company and
Subsidiaries
Summary of Business Segment Data
(Unaudited)
Effective at the beginning of 2019, all revenues and costs
associated with military derivative aircraft production are
reported in the Defense, Space & Security segment. Revenues and
costs associated with military derivative aircraft production were
previously reported in the Commercial Airplanes and Defense, Space
& Security segments. Business segment data for 2018 reflects
the realignment for military derivative aircraft as well as the
realignment of certain programs from Defense, Space & Security
to Global Services.
|
Nine months
ended
September 30 |
|
Three months
ended
September 30 |
(Dollars in millions) |
2019 |
|
2018 |
|
2019 |
|
2018 |
Revenues: |
|
|
|
|
|
|
|
Commercial Airplanes |
$24,793 |
|
$40,968 |
|
$8,249 |
|
$14,071 |
Defense, Space & Security |
20,265 |
|
19,518 |
|
7,042 |
|
6,937 |
Global Services |
13,820 |
|
12,148 |
|
4,658 |
|
4,101 |
Boeing Capital |
207 |
|
214 |
|
66 |
|
77 |
Unallocated items, eliminations and other |
(437) |
|
(62) |
|
(35) |
|
(40) |
Total revenues |
$58,648 |
|
$72,786 |
|
$19,980 |
|
$25,146 |
(Loss)/earnings from operations: |
|
|
|
|
|
|
|
Commercial Airplanes |
($3,813) |
|
$5,230 |
|
($40) |
|
$2,033 |
Defense, Space & Security |
2,577 |
|
886 |
|
755 |
|
(247) |
Global Services |
2,013 |
|
1,799 |
|
673 |
|
548 |
Boeing Capital |
86 |
|
71 |
|
29 |
|
27 |
Segment operating profit |
863 |
|
7,986 |
|
1,417 |
|
2,361 |
Unallocated items, eliminations and other |
(1,727) |
|
(1,193) |
|
(522) |
|
(471) |
FAS/CAS service cost adjustment |
1,093 |
|
1,019 |
|
364 |
|
337 |
Earnings from operations |
229 |
|
7,812 |
|
1,259 |
|
2,227 |
Other income |
334 |
|
63 |
|
121 |
|
12 |
Interest and debt expense |
(480) |
|
(317) |
|
(203) |
|
(106) |
Earnings before income taxes |
83 |
|
7,558 |
|
1,177 |
|
2,133 |
Income tax benefit/(expense) |
291 |
|
(522) |
|
(10) |
|
230 |
Net earnings |
$374 |
|
$7,036 |
|
$1,167 |
|
$2,363 |
|
|
|
|
|
|
|
|
Research and development expense, net: |
|
|
|
|
|
|
|
Commercial Airplanes |
$1,529 |
|
$1,616 |
|
$467 |
|
$517 |
Defense, Space & Security |
569 |
|
613 |
|
185 |
|
211 |
Global Services |
102 |
|
119 |
|
29 |
|
48 |
Other |
270 |
|
69 |
|
97 |
|
50 |
Total research and development expense,
net |
$2,470 |
|
$2,417 |
|
$778 |
|
$826 |
|
|
|
|
|
|
|
|
Unallocated items, eliminations and
other: |
|
|
|
|
|
|
|
Share-based plans |
($57) |
|
($60) |
|
($21) |
|
($24) |
Deferred compensation |
(154) |
|
(112) |
|
(25) |
|
(56) |
Amortization of previously capitalized
interest |
(68) |
|
(67) |
|
(23) |
|
(19) |
Customer financing impairment |
(250) |
|
|
|
|
|
|
Research and development expense, net |
(270) |
|
(69) |
|
(97) |
|
(50) |
Eliminations and other unallocated items |
(928) |
|
(885) |
|
(356) |
|
(322) |
Sub-total (included in core operating
earnings) |
(1,727) |
|
(1,193) |
|
(522) |
|
(471) |
Pension FAS/CAS service cost adjustment |
823 |
|
780 |
|
274 |
|
260 |
Postretirement FAS/CAS service cost
adjustment |
270 |
|
239 |
|
90 |
|
77 |
FAS/CAS service cost adjustment |
1,093 |
|
1,019 |
|
$364 |
|
$337 |
Total |
($634) |
|
($174) |
|
($158) |
|
($134) |
The Boeing Company
and Subsidiaries |
Operating and
Financial Data |
(Unaudited) |
|
Deliveries |
Nine months
ended
September 30 |
|
Three months
ended
September 30 |
Commercial Airplanes |
2019 |
|
|
2018 |
|
2019 |
|
2018 |
737 |
118 |
|
|
407 |
|
5 |
|
138 |
747 |
5 |
|
|
5 |
|
1 |
|
2 |
767 |
32 |
|
|
13 |
|
10 |
|
4 |
777* |
33 |
(1) |
|
37 |
|
11 |
|
12 |
787 |
113 |
|
|
106 |
|
35 |
|
34 |
Total |
301 |
|
|
568 |
|
62 |
|
190 |
Note: Aircraft accounted for as
revenues by BCA and as operating leases in consolidation identified
by parentheses |
* The deliveries press release
originally published on October 8, 2019 indicated that there were
34 and 12 777 aircraft delivered for the nine and three months
ended September 30, 2019. These numbers have since been revised and
reflected in the totals. |
|
|
|
|
|
|
|
|
|
Defense, Space & Security |
|
|
|
|
|
|
|
|
AH-64 Apache (New) |
27 |
|
|
— |
|
17 |
|
— |
AH-64 Apache (Remanufactured) |
56 |
|
|
12 |
|
21 |
|
6 |
C-17 Globemaster III |
1 |
|
|
— |
|
1 |
|
— |
C-40A |
2 |
|
|
— |
|
2 |
|
— |
CH-47 Chinook (New) |
13 |
|
|
11 |
|
6 |
|
2 |
CH-47 Chinook (Renewed) |
16 |
|
|
14 |
|
7 |
|
6 |
F-15 Models |
7 |
|
|
8 |
|
2 |
|
3 |
F/A-18 Models |
16 |
|
|
10 |
|
6 |
|
5 |
KC-46 Tanker |
21 |
|
|
— |
|
9 |
|
— |
P-8 Models |
14 |
|
|
10 |
|
6 |
|
2 |
Commercial and Civil Satellites |
1 |
|
|
1 |
|
— |
|
1 |
Military Satellites |
— |
|
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
Total backlog (Dollars in
millions) |
September 30
2019 |
|
December 31
2018 |
Commercial Airplanes |
$387,397 |
|
$408,140 |
Defense, Space & Security |
61,740 |
|
61,277 |
Global Services |
21,088 |
|
21,064 |
Total backlog |
$470,225 |
|
$490,481 |
|
|
|
|
Contractual backlog |
$444,711 |
|
$462,070 |
Unobligated backlog |
25,514 |
|
28,411 |
Total backlog |
$470,225 |
|
$490,481 |
The Boeing Company and
Subsidiaries
Reconciliation of Non-GAAP Measures
(Unaudited)
The tables provided below reconcile the non-GAAP financial
measures core operating earnings, core operating margin, and core
earnings per share with the most directly comparable GAAP financial
measures, earnings from operations, operating margin, and diluted
earnings per share. See page 6 of this release for additional
information on the use of these non-GAAP financial measures.
(Dollars in millions, except per share
data) |
Third Quarter
2019 |
|
Third Quarter 2018 |
|
$ millions |
Per Share |
|
$ millions |
Per Share |
Revenues |
19,980 |
|
|
25,146 |
|
Earnings from operations (GAAP) |
1,259 |
|
|
2,227 |
|
Operating margin (GAAP) |
6.3% |
|
|
8.9% |
|
|
|
|
|
|
|
FAS/CAS service cost adjustment: |
|
|
|
|
|
Pension FAS/CAS service cost adjustment |
(274) |
|
|
(260) |
|
Postretirement FAS/CAS service cost
adjustment |
(90) |
|
|
(77) |
|
FAS/CAS service cost adjustment |
(364) |
|
|
(337) |
|
Core operating earnings (non-GAAP) |
$895 |
|
|
$1,890 |
|
Core operating margin (non-GAAP) |
4.5% |
|
|
7.5% |
|
|
|
|
|
|
|
Diluted earnings per share (GAAP) |
|
$2.05 |
|
|
$4.07 |
Pension FAS/CAS service cost adjustment |
($274) |
(0.48) |
|
($260) |
(0.45) |
Postretirement FAS/CAS service cost
adjustment |
(90) |
(0.16) |
|
(77) |
(0.13) |
Non-operating pension expense |
(93) |
(0.17) |
|
(50) |
(0.09) |
Non-operating postretirement expense |
27 |
0.05 |
|
29 |
0.05 |
Provision for deferred income taxes on
adjustments 1 |
90 |
0.16 |
|
75 |
0.13 |
Subtotal of adjustments |
($340) |
($0.60) |
|
($283) |
($0.49) |
Core earnings per share (non-GAAP) |
|
$1.45 |
|
|
$3.58 |
|
|
|
|
|
|
Weighted average diluted shares (in
millions) |
|
569.2 |
|
|
580.8 |
|
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 (loss)/earnings, core operating margin, and
core (loss)/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) |
Nine Months
2019 |
|
Nine Months 2018 |
|
$ millions |
Per Share |
|
$ millions |
Per Share |
Revenues |
58,648 |
|
|
72,786 |
|
Earnings from operations (GAAP) |
229 |
|
|
7,812 |
|
Operating margin (GAAP) |
0.4% |
|
|
10.7% |
|
|
|
|
|
|
|
FAS/CAS service cost adjustment: |
|
|
|
|
|
Pension FAS/CAS service cost adjustment |
(823) |
|
|
(780) |
|
Postretirement FAS/CAS service cost
adjustment |
(270) |
|
|
(239) |
|
FAS/CAS service cost adjustment |
(1,093) |
|
|
(1,019) |
|
Core operating (loss)/earnings
(non-GAAP) |
($864) |
|
|
$6,793 |
|
Core operating margin (non-GAAP) |
(1.5)% |
|
|
9.3% |
|
|
|
|
|
|
|
Diluted earnings per share (GAAP) |
|
$0.66 |
|
|
$11.95 |
Pension FAS/CAS service cost adjustment |
($823) |
(1.45) |
|
($780) |
(1.32) |
Postretirement FAS/CAS service cost
adjustment |
(270) |
(0.47) |
|
(239) |
(0.41) |
Non-operating pension expense |
(280) |
(0.49) |
|
(98) |
(0.17) |
Non-operating postretirement expense |
80 |
0.14 |
|
77 |
0.13 |
Provision for deferred income taxes on
adjustments 1 |
272 |
0.48 |
|
218 |
0.37 |
Subtotal of adjustments |
($1,021) |
($1.79) |
|
($822) |
($1.40) |
Core (loss)/earnings per share
(non-GAAP) |
|
($1.13) |
|
|
$10.55 |
|
|
|
|
|
|
Weighted average diluted shares (in
millions) |
|
570.4 |
|
|
588.9 |
|
1 The income tax
impact is calculated using the U.S. corporate statutory tax
rate. |
|
|
|
|
|
|
|