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| 8-K - FORM 8-K - BOEING CO | 3Q13_8-K_HTML.htm |
Exhibit 99.1 | ||
News Release | ||
 | ||
Boeing Corporate Offices 100 North Riverside Plaza Chicago, IL 60606-1596 www.boeing.com | ||
Boeing Reports Strong Third-Quarter Results and Raises 2013 EPS Guidance
▪ | Core EPS (non-GAAP)* rose 16 percent to $1.80 on strong operating performance; GAAP EPS of $1.51 |
▪ | Revenue increased 11 percent to $22.1 billion reflecting higher commercial deliveries |
▪ | Backlog grew to a record $415 billion, including $27 billion of net orders during the quarter |
▪ | Operating cash flow before pension contributions* increased to $4.3 billion |
▪ | 2013 Core EPS guidance increased to between $6.50 and $6.65; GAAP EPS to between $5.40 and $5.55 |
Table 1. Summary Financial Results | Third Quarter | Nine Months | ||||||||||||||||||
(Dollars in Millions, except per share data) | 2013 | 2012 | Change | 2013 | 2012 | Change | ||||||||||||||
Revenues | $22,130 | $20,008 | 11% | $62,838 | $59,396 | 6% | ||||||||||||||
Non-GAAP* | ||||||||||||||||||||
Core Operating Earnings | $2,143 | $1,793 | 20% | $6,038 | $5,353 | 13% | ||||||||||||||
Core Operating Margin | 9.7 | % | 9.0 | % | 0.7 Pts | 9.6 | % | 9.0 | % | 0.6 Pts | ||||||||||
Core Earnings Per Share | $1.80 | $1.55 | 16% | $5.20 | $4.43 | 17% | ||||||||||||||
Operating Cash Flow Before Pension Contributions | $4,308 | $2,346 | 84% | $8,312 | $4,854 | 71% | ||||||||||||||
GAAP | ||||||||||||||||||||
Earnings From Operations | $1,803 | $1,559 | 16% | $5,047 | $4,666 | 8% | ||||||||||||||
Operating Margin | 8.1 | % | 7.8 | % | 0.3 Pts | 8.0 | % | 7.9 | % | 0.1 Pts | ||||||||||
Net Earnings | $1,158 | $1,032 | 12% | $3,352 | $2,922 | 15% | ||||||||||||||
Earnings Per Share | $1.51 | $1.35 | 12% | $4.36 | $3.84 | 14% | ||||||||||||||
Operating Cash Flow | $2,808 | $1,596 | 76% | $6,799 | $3,341 | 104% | ||||||||||||||
* Non-GAAP measures (core operating earnings, core operating margin and core earnings per share) exclude certain components of pension and post retirement benefit expense that the company believes are not reflective of underlying business performance. Complete definitions of Boeing’s non-GAAP measures are on page 6, “Non-GAAP Measures Disclosures.”
CHICAGO, October 23, 2013 – The Boeing Company [NYSE: BA] reported third-quarter core earnings per share (non-GAAP) increased 16 percent* to $1.80, driven by strong performance across the company's businesses (Table 1). Third-quarter core operating earnings (non-GAAP) increased 20 percent* to $2.1 billion from the same period of the prior year. Third-quarter revenue was $22.1 billion, GAAP earnings from operations was $1.8 billion and earnings per share was $1.51. Core earnings per share guidance increased to between $6.50 and $6.65 and
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GAAP earnings per share guidance increased to between $5.40 and $5.55, reflecting the strong performance. The company also increased its 2013 operating cash flow outlook to greater than $7 billion, which includes $1.5 billion of discretionary pension contributions, and reaffirmed its 2013 revenue guidance.
"Consistently strong operating performance is driving higher earnings, revenue and cash flow as we deliver on our record backlog and return increased value to shareholders," said Boeing Chairman, President and CEO Jim McNerney. "During the quarter, Commercial Airplanes completed the first flight of the 787-9 and delivered 170 airplanes, while Defense, Space & Security maintained solid performance and captured $7 billion in new orders. Despite the uncertainty of the U.S. defense market, overall our customer-focused business strategies and disciplined execution on our programs are producing the results we expect, and our strong year-to-date performance and positive outlook allow us to increase our 2013 guidance for earnings and operating cash flow."
Table 2. Cash Flow | Third Quarter | Nine Months | ||||||||||||||
(Millions) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Operating Cash Flow Before Pension Contributions* | $4,308 | $2,346 | $8,312 | $4,854 | ||||||||||||
Pension Contributions | ($1,500 | ) | ($750 | ) | ($1,513 | ) | ($1,513 | ) | ||||||||
Operating Cash Flow | $2,808 | $1,596 | $6,799 | $3,341 | ||||||||||||
Less Additions to Property, Plant & Equipment | ($484 | ) | ($428 | ) | ($1,460 | ) | ($1,208 | ) | ||||||||
Free Cash Flow* | $2,324 | $1,168 | $5,339 | $2,133 | ||||||||||||
Operating cash flow before pension contributions* in the quarter was $4.3 billion, reflecting higher commercial airplane production rates, strong core operating performance and timing of receipts and expenditures (Table 2). During the quarter, the company repurchased 7.6 million shares for $0.8 billion and paid $0.4 billion in dividends, reflecting an 11 percent increase in dividends paid compared to the same period of the prior year.
Table 3. Cash, Marketable Securities and Debt Balances | Quarter-End | |||||||
(Billions) | Q3 13 | Q2 13 | ||||||
Cash | $10.0 | $8.7 | ||||||
Marketable Securities1 | $5.9 | $5.6 | ||||||
Total | $15.9 | $14.3 | ||||||
Debt Balances: | ||||||||
The Boeing Company, net of intercompany loans to BCC | $7.0 | $7.0 | ||||||
Boeing Capital Corporation, including intercompany loans | $2.6 | $2.6 | ||||||
Total Consolidated Debt | $9.6 | $9.6 | ||||||
1 Marketable securities consists primarily of time deposits due within one year classified as "short-term investments."
Cash and investments in marketable securities totaled $15.9 billion at quarter-end (Table 3), up from $14.3 billion at the beginning of the quarter. Debt was $9.6 billion, unchanged from the beginning of the quarter.
Total company backlog at quarter-end was a record $415 billion, up from $410 billion at the beginning of the quarter, and included net orders for the quarter of $27 billion.
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Segment Results
Commercial Airplanes
Table 4. Commercial Airplanes | Third Quarter | Nine Months | |||||||||||||||||||
(Dollars in Millions) | 2013 | 2012 | Change | 2013 | 2012 | Change | |||||||||||||||
Commercial Airplanes Deliveries | 170 | 149 | 14% | 476 | 436 | 9% | |||||||||||||||
Revenues | $13,987 | $12,186 | 15% | $38,301 | $34,966 | 10% | |||||||||||||||
Earnings from Operations | $1,617 | $1,153 | 40% | $4,289 | $3,445 | 24 % | |||||||||||||||
Operating Margins | 11.6 | % | 9.5 | % | 2.1 Pts | 11.2 | % | 9.9 | % | 1.3 | Pts | ||||||||||
Boeing Commercial Airplanes third-quarter revenue increased to $14.0 billion and operating margin improved to 11.6 percent on higher delivery volume and continued strong operating performance (Table 4).
During the quarter, the 787-9 completed first flight. With the successful launch of the 787-10 and continued strong demand for the 787 family of airplanes, the company intends to increase the 787 production rate from 10 to 12 per month in 2016, with plans to increase to 14 per month before the end of the decade.
Commercial Airplanes booked 200 net orders during the quarter. Backlog remains strong with nearly 4,800 airplanes valued at a record $345 billion.
Boeing Defense, Space & Security
Table 5. Defense, Space & Security | Third Quarter | Nine Months | |||||||||||||||||||
(Dollars in Millions) | 2013 | 2012 | Change | 2013 | 2012 | Change | |||||||||||||||
Revenues | |||||||||||||||||||||
Boeing Military Aircraft | $3,543 | $3,710 | (5)% | $11,541 | $11,982 | (4)% | |||||||||||||||
Network & Space Systems | $2,231 | $2,055 | 9% | $6,240 | $5,887 | 6% | |||||||||||||||
Global Services & Support | $2,272 | $2,074 | 10% | $6,561 | $6,395 | 3% | |||||||||||||||
Total BDS Revenues | $8,046 | $7,839 | 3% | $24,342 | $24,264 | — | |||||||||||||||
Earnings from Operations | |||||||||||||||||||||
Boeing Military Aircraft | $221 | $424 | (48)% | $1,024 | $1,176 | (13)% | |||||||||||||||
Network & Space Systems | $193 | $179 | 8% | $486 | $424 | 15% | |||||||||||||||
Global Services & Support | $259 | $224 | 16% | $771 | $717 | 8% | |||||||||||||||
Total BDS Earnings from Operations | $673 | $827 | (19)% | $2,281 | $2,317 | (2)% | |||||||||||||||
Operating Margins | 8.4 | % | 10.5 | % | (2.1) Pts | 9.4 | % | 9.5 | % | (0.1) Pts | |||||||||||
Boeing Defense, Space & Security’s third-quarter revenue was $8.0 billion, while operating margin was 8.4 percent (Table 5).
Boeing Military Aircraft (BMA) third-quarter revenue was $3.5 billion, primarily reflecting lower delivery volume. Operating margin decreased to 6.2 percent, impacted by mix and one-time charges on the F-15 and C-17 programs. During the quarter, BMA was awarded a low-rate initial production award for 13 P-8A Poseidon aircraft.
Network & Space Systems (N&SS) third-quarter revenue was $2.2 billion, reflecting higher sales of Delta inventory and revenue in the Space Launch System program, and operating margin was 8.7 percent. During the quarter, N&SS was awarded a contract by Mexico’s Satmex for an additional 702 small satellite.
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Global Services & Support (GS&S) third-quarter revenue was $2.3 billion, due to higher volume in maintenance, modifications & upgrades. Operating margin was 11.4 percent, reflecting strong performance. During the quarter, GS&S achieved first flight on the QF-16 unmanned aircraft and was also awarded a contract by the U.S. Air Force for 56 additional replacement wings for the A-10 aircraft.
Backlog at Defense, Space & Security was $70 billion, of which 38 percent represents orders with international customers.
Additional Financial Information
Table 6. Additional Financial Information | Third Quarter | Nine Months | ||||||||||||||
(Dollars in Millions) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenues | ||||||||||||||||
Boeing Capital Corporation | $94 | $101 | $303 | $339 | ||||||||||||
Other segment | $26 | $27 | $80 | $79 | ||||||||||||
Unallocated items and eliminations | ($23 | ) | ($145 | ) | ($188 | ) | ($252 | ) | ||||||||
Earnings from Operations | ||||||||||||||||
Boeing Capital Corporation | $35 | $28 | $98 | $100 | ||||||||||||
Other segment income/(expense) | $44 | ($74 | ) | ($57 | ) | ($217 | ) | |||||||||
Unallocated items and eliminations included in core operating earnings | ($226 | ) | ($141 | ) | ($573 | ) | ($292 | ) | ||||||||
Unallocated pension/postretirement expense | ($340 | ) | ($234 | ) | ($991 | ) | ($687 | ) | ||||||||
Other income, net | $19 | $17 | $41 | $39 | ||||||||||||
Interest and debt expense | ($95 | ) | ($110 | ) | ($290 | ) | ($330 | ) | ||||||||
Effective tax rate | 32.8 | % | 29.5 | % | 30.1 | % | 33.1 | % | ||||||||
At quarter-end, Boeing Capital Corporation’s (BCC) net portfolio balance was $4.1 billion and debt-to-equity ratio was 5.0-to-1. Other segment earnings improved $118 million in the quarter primarily due to an insurance recovery. Unallocated items and eliminations included in core operating earnings increased in the third quarter of 2013 partly due to higher deferred compensation expense as a result of stock price appreciation. Total pension expense for the third quarter was $775 million, up from $583 million in the same period last year. Unallocated pension expense included a charge related to the previously announced decision to end C-17 production in 2015 offset by a one-time prior period pension adjustment.
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Outlook
The company’s 2013 financial guidance (Table 7) has been updated to reflect continued strong performance in both businesses, generating an expected 12 percent year over year increase in core earnings per share (non-GAAP).
Table 7. Financial Outlook | |
(Dollars in Billions, except per share data) | 2013 |
The Boeing Company | |
Revenue | $83 - 86 |
Core Earnings Per Share* | $6.50 - 6.65 |
Earnings Per Share | $5.40 - 5.55 |
Operating Cash Flow Before Pension Contributions* | > $8.5 |
Operating Cash Flow 1 | > $7 |
Boeing Commercial Airplanes | |
Deliveries 2 | 635 - 645 |
Revenue | $51 - 53 |
Operating Margin | > 10.0% |
Boeing Defense, Space & Security | |
Revenue | |
Boeing Military Aircraft | ~$16.0 |
Network & Space Systems | ~$7.8 |
Global Services & Support | ~$8.2 |
Total BDS Revenue | $31.5 - 32.5 |
Operating Margin | |
Boeing Military Aircraft | ~ 9.0% |
Network & Space Systems | ~ 7.5% |
Global Services & Support | ~ 11.5% |
Total BDS Operating Margin | > 9.25% |
Boeing Capital Corporation | |
Portfolio Size | Lower |
Revenue | ~ $0.4 |
Pre-Tax Earnings | ~ $0.05 |
Research & Development | ~ $3.2 |
Capital Expenditures | ~ $2.3 |
Pension Expense 3 | ~ $3.2 |
Effective Tax Rate | ~ 31% |
1 After discretionary cash pension contributions of $1.5 billion and assuming new aircraft financings under $0.5 billion.
2 Assumes greater than 60 787 deliveries.
3 Approximately $1.4 billion is expected to be recorded in unallocated items and eliminations.
* Non-GAAP measures. Complete definitions of Boeing’s use of non-GAAP measures are on page 6, “Non-GAAP Measures Disclosures.”
Core earnings per share guidance for 2013 increased to between $6.50 and $6.65, up from between $6.20 and $6.40, and earnings per share guidance increased to between $5.40 and $5.55, up from between $5.10 and
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$5.30, both reflecting the strong operating performance. Total company 2013 operating cash flow before pension contributions (non-GAAP) is now expected to be greater than $8.5 billion, up from greater than $8.0 billion. Operating cash flow is now expected to be greater than $7 billion in 2013, up from greater than $6.5 billion, including $1.5 billion of discretionary pension contributions.
Commercial Airplanes' operating margin increased to greater than 10.0 percent, up from greater than 9.5 percent. Defense, Space & Security's operating margin increased to greater than 9.25 percent, up from greater than 9.0 percent, reflecting higher margins in Global Services & Support.
Boeing Capital Corporation revenue increased to approximately $0.4 billion, up from approximately $0.3 billion. Research and development expense for 2013 is now expected to be approximately $3.2 billion, down from approximately $3.3 billion.
Non-GAAP Measures Disclosures
We supplement the reporting of our financial information determined under U.S. generally accepted accounting principles (GAAP) with certain non-GAAP financial information. The non-GAAP financial information presented excludes certain significant items that may not be indicative of, or are unrelated to, results from our ongoing business operations. We believe that these non-GAAP measures provide investors with additional insight into the company’s ongoing business performance. These non-GAAP measures should not be considered in isolation or as a substitute for the related GAAP measures, and other companies may define such measures differently. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. The following definitions are provided:
Core Operating Earnings, Core Operating Margin and Core Earnings Per Share
Core operating earnings is defined as GAAP earnings from operations excluding unallocated pension and post-retirement expense. Core operating margin is defined as core operating earnings expressed as a percentage of revenue. Core earnings per share is defined as GAAP diluted earnings per share excluding the net earnings per share impact of unallocated pension and post-retirement expense. Unallocated pension and post-retirement expense represents the portion of pension and other post-retirement costs that are not recognized by business segments for segment reporting purposes. Management uses core operating earnings, core operating margin and core earnings per share for purposes of evaluating and forecasting underlying business performance. Management believes these core earnings measures provide investors additional insights into operational performance as they exclude unallocated pension and post-retirement costs, which primarily represent costs driven by market factors and costs not allocable to government contracts.
Operating Cash Flow Before Pension Contributions
Operating cash flow before pension contributions is defined as GAAP operating cash flow less pension contributions. Management believes operating cash flow before pension contributions provides additional insights into underlying business performance. Management uses operating cash flow before pension contributions as a measure to assess both business performance and overall liquidity. Table 2 provides a reconciliation between GAAP operating cash flow and operating cash flow before pension contributions.
Free Cash Flow
Free cash flow is defined as GAAP operating cash flow less 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.
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Caution Concerning Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “may,” “should,” “expects,” “intends,” “projects,” “plans,” “believes,” “estimates,” “targets,” “anticipates,” and similar expressions are used to identify these forward-looking statements. Examples of forward-looking statements include statements relating to our future financial condition and operating results, as well as any other statement that does not directly relate to any historical or current fact. Forward-looking statements are based on our current expectations and assumptions, which may not prove to be accurate. These statements are not guarantees and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict. Many factors could cause actual results to differ materially and adversely from these forward-looking statements. Among these factors are risks related to: (1) general conditions in the economy and our industry, including those due to regulatory changes; (2) our reliance on our commercial airline customers; (3) the overall health of our aircraft production system, planned production rate increases across multiple commercial airline programs, our commercial development and derivative aircraft programs, and our aircraft being subject to stringent performance and reliability standards; (4) changing 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 or natural disasters; (19) work stoppages or other labor disruptions; (20) significant changes in discount rates and actual investment return on pension assets; (21) potential environmental liabilities; and (22) threats to the security of our or our customers’ information.
Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Any forward-looking statement speaks only as of the date on which it is made, and we assume no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.
# # #
Contact:
Investor Relations: | Troy Lahr or Matt Welch (312) 544-2140 | |
Communications: | Chaz Bickers (312) 544-2002 | |
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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) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Sales of products | $55,310 | $51,441 | $19,754 | $17,415 | |||||||||||
Sales of services | 7,528 | 7,955 | 2,376 | 2,593 | |||||||||||
Total revenues | 62,838 | 59,396 | 22,130 | 20,008 | |||||||||||
Cost of products | (47,030 | ) | (43,103 | ) | (16,865 | ) | (14,683 | ) | |||||||
Cost of services | (5,795 | ) | (6,431 | ) | (1,791 | ) | (2,089 | ) | |||||||
Boeing Capital interest expense | (55 | ) | (85 | ) | (18 | ) | (27 | ) | |||||||
Total costs and expenses | (52,880 | ) | (49,619 | ) | (18,674 | ) | (16,799 | ) | |||||||
9,958 | 9,777 | 3,456 | 3,209 | ||||||||||||
Income from operating investments, net | 147 | 211 | 59 | 120 | |||||||||||
General and administrative expense | (2,856 | ) | (2,774 | ) | (956 | ) | (916 | ) | |||||||
Research and development expense, net | (2,223 | ) | (2,545 | ) | (755 | ) | (853 | ) | |||||||
Gain/(loss) on dispositions, net | 21 | (3 | ) | (1 | ) | (1 | ) | ||||||||
Earnings from operations | 5,047 | 4,666 | 1,803 | 1,559 | |||||||||||
Other income, net | 41 | 39 | 19 | 17 | |||||||||||
Interest and debt expense | (290 | ) | (330 | ) | (95 | ) | (110 | ) | |||||||
Earnings before income taxes | 4,798 | 4,375 | 1,727 | 1,466 | |||||||||||
Income tax expense | (1,445 | ) | (1,450 | ) | (567 | ) | (432 | ) | |||||||
Net earnings from continuing operations | 3,353 | 2,925 | 1,160 | 1,034 | |||||||||||
Net loss on disposal of discontinued operations, net of taxes of $0, $2, $0 and $1 | (1 | ) | (3 | ) | (2 | ) | (2 | ) | |||||||
Net earnings | $3,352 | $2,922 | $1,158 | $1,032 | |||||||||||
Basic earnings per share from continuing operations | $4.40 | $3.86 | $1.53 | $1.36 | |||||||||||
Net loss on disposal of discontinued operations, net of taxes | |||||||||||||||
Basic earnings per share | $4.40 | $3.86 | $1.53 | $1.36 | |||||||||||
Diluted earnings per share from continuing operations | $4.36 | $3.84 | $1.51 | $1.35 | |||||||||||
Net loss on disposal of discontinued operations, net of taxes | |||||||||||||||
Diluted earnings per share | $4.36 | $3.84 | $1.51 | $1.35 | |||||||||||
Cash dividends paid per share | $1.455 | $1.32 | $0.485 | $0.44 | |||||||||||
Weighted average diluted shares (millions) | 769.8 | 762.3 | 769.1 | 765.2 | |||||||||||
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The Boeing Company and Subsidiaries
Consolidated Statements of Financial Position
(Unaudited)
(Dollars in millions, except per share data) | September 30 2013 | December 31 2012 | |||||
Assets | |||||||
Cash and cash equivalents | $10,041 | $10,341 | |||||
Short-term and other investments | 5,870 | 3,217 | |||||
Accounts receivable, net | 6,652 | 5,608 | |||||
Current portion of customer financing, net | 316 | 364 | |||||
Deferred income taxes | 43 | 28 | |||||
Inventories, net of advances and progress billings | 41,240 | 37,751 | |||||
Total current assets | 64,162 | 57,309 | |||||
Customer financing, net | 3,903 | 4,056 | |||||
Property, plant and equipment, net of accumulated depreciation of $14,938 and $14,645 | 9,987 | 9,660 | |||||
Goodwill | 5,047 | 5,035 | |||||
Acquired intangible assets, net | 2,962 | 3,111 | |||||
Deferred income taxes | 5,957 | 6,753 | |||||
Investments | 1,168 | 1,180 | |||||
Other assets, net of accumulated amortization of $493 and $504 | 1,447 | 1,792 | |||||
Total assets | $94,633 | $88,896 | |||||
Liabilities and equity | |||||||
Accounts payable | $10,657 | $9,394 | |||||
Accrued liabilities | 12,384 | 12,995 | |||||
Advances and billings in excess of related costs | 20,216 | 16,672 | |||||
Deferred income taxes and income taxes payable | 5,504 | 4,485 | |||||
Short-term debt and current portion of long-term debt | 919 | 1,436 | |||||
Total current liabilities | 49,680 | 44,982 | |||||
Accrued retiree health care | 7,415 | 7,528 | |||||
Accrued pension plan liability, net | 18,559 | 19,651 | |||||
Non-current income taxes payable | 299 | 366 | |||||
Other long-term liabilities | 936 | 1,429 | |||||
Long-term debt | 8,677 | 8,973 | |||||
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 | 4,295 | 4,122 | |||||
Treasury stock, at cost - 260,351,104 and 256,630,628 shares | (16,865 | ) | (15,937 | ) | |||
Retained earnings | 32,647 | 30,037 | |||||
Accumulated other comprehensive loss | (16,187 | ) | (17,416 | ) | |||
Total shareholders’ equity | 8,951 | 5,867 | |||||
Noncontrolling interest | 116 | 100 | |||||
Total equity | 9,067 | 5,967 | |||||
Total liabilities and equity | $94,633 | $88,896 | |||||
9
The Boeing Company and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Nine months ended September 30 | |||||||
(Dollars in millions) | 2013 | 2012 | |||||
Cash flows – operating activities: | |||||||
Net earnings | $3,352 | $2,922 | |||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||
Non-cash items – | |||||||
Share-based plans expense | 156 | 148 | |||||
Depreciation and amortization | 1,323 | 1,313 | |||||
Investment/asset impairment charges, net | 38 | 59 | |||||
Customer financing valuation benefit | (7 | ) | (4 | ) | |||
Loss on disposal of discontinued operations | 1 | 5 | |||||
(Gain)/loss on dispositions, net | (21 | ) | 3 | ||||
Other charges and credits, net | 48 | 559 | |||||
Excess tax benefits from share-based payment arrangements | (86 | ) | (43 | ) | |||
Changes in assets and liabilities – | |||||||
Accounts receivable | (1,006 | ) | 150 | ||||
Inventories, net of advances and progress billings | (3,631 | ) | (4,588 | ) | |||
Accounts payable | 943 | 857 | |||||
Accrued liabilities | (338 | ) | (123 | ) | |||
Advances and billings in excess of related costs | 3,543 | 123 | |||||
Income taxes receivable, payable and deferred | 1,336 | 1,085 | |||||
Other long-term liabilities | (52 | ) | 22 | ||||
Pension and other postretirement plans | 954 | 571 | |||||
Customer financing, net | 223 | 254 | |||||
Other | 23 | 28 | |||||
Net cash provided by operating activities | 6,799 | 3,341 | |||||
Cash flows – investing activities: | |||||||
Property, plant and equipment additions | (1,460 | ) | (1,208 | ) | |||
Property, plant and equipment reductions | 47 | 29 | |||||
Acquisitions, net of cash acquired | (26 | ) | (18 | ) | |||
Contributions to investments | (9,640 | ) | (10,331 | ) | |||
Proceeds from investments | 6,997 | 6,941 | |||||
Purchase of distribution rights | (6 | ) | |||||
Net cash used by investing activities | (4,082 | ) | (4,593 | ) | |||
Cash flows – financing activities: | |||||||
New borrowings | 547 | 34 | |||||
Debt repayments | (1,397 | ) | (1,273 | ) | |||
Repayments of distribution rights financing | (139 | ) | (72 | ) | |||
Stock options exercised, other | 871 | 96 | |||||
Excess tax benefits from share-based payment arrangements | 86 | 43 | |||||
Employee taxes on certain share-based payment arrangements | (60 | ) | (72 | ) | |||
Common shares repurchased | (1,799 | ) | |||||
Dividends paid | (1,102 | ) | (990 | ) | |||
Net cash used by financing activities | (2,993 | ) | (2,234 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (24 | ) | 19 | ||||
Net decrease in cash and cash equivalents | (300 | ) | (3,467 | ) | |||
Cash and cash equivalents at beginning of year | $10,341 | $10,049 | |||||
Cash and cash equivalents at end of period | $10,041 | $6,582 | |||||
10
The Boeing Company and Subsidiaries
Summary of Business Segment Data
(Unaudited)
Nine months ended September 30 | Three months ended September 30 | ||||||||||||||
(Dollars in millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Revenues: | |||||||||||||||
Commercial Airplanes | $38,301 | $34,966 | $13,987 | $12,186 | |||||||||||
Defense, Space & Security: | |||||||||||||||
Boeing Military Aircraft | 11,541 | 11,982 | 3,543 | 3,710 | |||||||||||
Network & Space Systems | 6,240 | 5,887 | 2,231 | 2,055 | |||||||||||
Global Services & Support | 6,561 | 6,395 | 2,272 | 2,074 | |||||||||||
Total Defense, Space & Security | 24,342 | 24,264 | 8,046 | 7,839 | |||||||||||
Boeing Capital | 303 | 339 | 94 | 101 | |||||||||||
Other segment | 80 | 79 | 26 | 27 | |||||||||||
Unallocated items and eliminations | (188 | ) | (252 | ) | (23 | ) | (145 | ) | |||||||
Total revenues | $62,838 | $59,396 | $22,130 | $20,008 | |||||||||||
Earnings from operations: | |||||||||||||||
Commercial Airplanes | $4,289 | $3,445 | $1,617 | $1,153 | |||||||||||
Defense, Space & Security: | |||||||||||||||
Boeing Military Aircraft | 1,024 | 1,176 | 221 | 424 | |||||||||||
Network & Space Systems | 486 | 424 | 193 | 179 | |||||||||||
Global Services & Support | 771 | 717 | 259 | 224 | |||||||||||
Total Defense, Space & Security | 2,281 | 2,317 | 673 | 827 | |||||||||||
Boeing Capital | 98 | 100 | 35 | 28 | |||||||||||
Other segment | (57 | ) | (217 | ) | 44 | (74 | ) | ||||||||
Unallocated items and eliminations | (1,564 | ) | (979 | ) | (566 | ) | (375 | ) | |||||||
Earnings from operations | 5,047 | 4,666 | 1,803 | 1,559 | |||||||||||
Other income, net | 41 | 39 | 19 | 17 | |||||||||||
Interest and debt expense | (290 | ) | (330 | ) | (95 | ) | (110 | ) | |||||||
Earnings before income taxes | 4,798 | 4,375 | 1,727 | 1,466 | |||||||||||
Income tax expense | (1,445 | ) | (1,450 | ) | (567 | ) | (432 | ) | |||||||
Net earnings from continuing operations | 3,353 | 2,925 | 1,160 | 1,034 | |||||||||||
Net loss on disposal of discontinued operations, net of taxes of $0, $2, $0 and $1 | (1 | ) | (3 | ) | (2 | ) | (2 | ) | |||||||
Net earnings | $3,352 | $2,922 | $1,158 | $1,032 | |||||||||||
Research and development expense, net: | |||||||||||||||
Commercial Airplanes | $1,297 | $1,638 | $432 | $534 | |||||||||||
Defense, Space & Security | 892 | 868 | 313 | 306 | |||||||||||
Other | 34 | 39 | 10 | 13 | |||||||||||
Total research and development expense, net | $2,223 | $2,545 | $755 | $853 | |||||||||||
Unallocated items and eliminations: | |||||||||||||||
Share-based plans | ($74 | ) | ($64 | ) | (21 | ) | (23 | ) | |||||||
Deferred compensation | (165 | ) | (49 | ) | (63 | ) | (15 | ) | |||||||
Capitalized interest | (52 | ) | (53 | ) | (18 | ) | (16 | ) | |||||||
Eliminations and other | (282 | ) | (126 | ) | (124 | ) | (87 | ) | |||||||
Sub-total (included in core operating earnings) | (573 | ) | (292 | ) | (226 | ) | (141 | ) | |||||||
Pension | (1,045 | ) | (608 | ) | (356 | ) | (204 | ) | |||||||
Postretirement | 54 | (79 | ) | 16 | (30 | ) | |||||||||
Total unallocated items and eliminations | ($1,564 | ) | ($979 | ) | ($566 | ) | ($375 | ) | |||||||
11
The Boeing Company and Subsidiaries
Operating and Financial Data
(Unaudited)
Deliveries | Nine months ended September 30 | Three months ended September 30 | ||||||||||||
Commercial Airplanes | 2013 | 2012 | 2013 | 2012 | ||||||||||
737 | 330 | 310 | 112 | 102 | ||||||||||
747 | 16 | 21 | 4 | 8 | ||||||||||
767 | 17 | 20 | 5 | 7 | ||||||||||
777 | 73 | 62 | 26 | 20 | ||||||||||
787 | 40 | (1) | 23 | 23 | 12 | |||||||||
Total | 476 | 436 | 170 | 149 | ||||||||||
Note: Deliveries under operating lease are identified by parentheses. | ||||||||||||||
Defense, Space & Security | ||||||||||||||
Boeing Military Aircraft | ||||||||||||||
F/A-18 Models | 36 | 36 | 12 | 12 | ||||||||||
F-15E Eagle | 3 | 8 | ||||||||||||
C-17 Globemaster III | 8 | 8 | 2 | 3 | ||||||||||
CH-47 Chinook | 32 | 40 | 15 | 18 | ||||||||||
AH-64 Apache | 31 | 13 | 11 | 10 | ||||||||||
P-8 Models | 7 | 3 | 2 | 2 | ||||||||||
AEW&C | 2 | |||||||||||||
Network & Space Systems | ||||||||||||||
Commercial and Civil Satellites | 1 | 3 | 2 | |||||||||||
Military Satellites | 1 | 6 | 1 | 3 | ||||||||||
Contractual backlog (Dollars in billions) | September 30 2013 | June 30 2013 | March 31 2013 | December 31 2012 | ||||||||||||
Commercial Airplanes | $344.3 | $337.7 | $322.0 | $317.3 | ||||||||||||
Defense, Space & Security: | ||||||||||||||||
Boeing Military Aircraft | 26.4 | 26.5 | 26.6 | 29.2 | ||||||||||||
Network & Space Systems | 9.9 | 10.2 | 9.6 | 10.1 | ||||||||||||
Global Services & Support | 14.6 | 14.8 | 15.4 | 15.8 | ||||||||||||
Total Defense, Space & Security | 50.9 | 51.5 | 51.6 | 55.1 | ||||||||||||
Total contractual backlog | $395.2 | $389.2 | $373.6 | $372.4 | ||||||||||||
Unobligated backlog | $19.9 | $21.1 | $18.1 | $17.9 | ||||||||||||
Total backlog | $415.1 | $410.3 | $391.7 | $390.3 | ||||||||||||
Workforce | 170,800 | 172,200 | 173,100 | 174,400 | ||||||||||||
12
The Boeing Company and Subsidiaries
Reconciliation of Non-GAAP Measures
Core Operating Earnings, Core Operating Margin and Core Earnings Per Share
(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.
Nine months ended September 30 | Three months ended September 30 | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Revenues | $62,838 | $59,396 | $22,130 | $20,008 | ||||||||||||
GAAP Earnings From Operations | $5,047 | $4,666 | $1,803 | $1,559 | ||||||||||||
GAAP Operating Margin | 8.0 | % | 7.9 | % | 8.1 | % | 7.8 | % | ||||||||
Unallocated Pension/Postretirement Expense | $991 | $687 | $340 | $234 | ||||||||||||
Core Operating Earnings (non-GAAP) | $6,038 | $5,353 | $2,143 | $1,793 | ||||||||||||
Core Operating Margin (non-GAAP) | 9.6 | % | 9.0 | % | 9.7 | % | 9.0 | % | ||||||||
GAAP Diluted Earnings Per Share | $4.36 | $3.84 | $1.51 | $1.35 | ||||||||||||
Unallocated Pension/Postretirement Expense1 | $0.84 | $0.59 | $0.29 | $0.20 | ||||||||||||
Core Earnings Per Share (non-GAAP) | $5.20 | $4.43 | $1.80 | $1.55 | ||||||||||||
Weighted Average Diluted Shares (millions) | 769.8 | 762.3 | 769.1 | 765.2 | ||||||||||||
Increase in GAAP Earnings Per Share | 14 | % | 12 | % | ||||||||||||
Increase in Core Earnings Per Share | 17 | % | 16 | % | ||||||||||||
1 Earnings per share impact is presented net of the federal statutory tax rate of 35.0 percent.
13
The Boeing Company and Subsidiaries
Reconciliation of Non-GAAP Measures
2013 Increase in Core Earnings Per Share
(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.
Year Ended December 31, 2012 | Year Ended December 31, 2013 Guidance | |||||||
Earnings Per Share | Earnings Per Share | |||||||
GAAP Diluted Earnings Per Share | $5.11 | $5.40 - 5.55 | ||||||
Unallocated Pension/Postretirement Expense | 0.77 | a | 1.10 | b | ||||
Core Earnings Per Share (non-GAAP) | $5.88 | $6.50 - 6.65 | ||||||
Weighted average diluted shares (millions) | 763.8 | 768.0 | ||||||
2013 Change in GAAP Earnings per Share | ~ 7% | |||||||
2013 Increase in Core Earnings per Share | ~ 12% | |||||||
a | Represents the net earnings per share impact of unallocated pension and postretirement expense of $899 million, net of the federal statutory tax rate of 35.0 percent. |
b | Represents the net earnings per share impact of unallocated pension and postretirement expense of approximately $1.3 billion, net of the federal statutory tax rate of 35.0 percent. |
14