Boeing Reports Strong Second-Quarter Results and Raises 2013 EPS Guidance

Jul 24, 2013

CHICAGO, July 24, 2013 /PRNewswire/ --

  • Core EPS (non-GAAP)* rose 13 percent to $1.67 on strong operating performance; GAAP EPS of $1.41
  • Revenue increased 9 percent to $21.8 billion reflecting higher deliveries on the 787 and 737 programs
  • Backlog grew to a record $410 billion, including $40 billion of net orders during the quarter
  • Operating cash flow before pension contributions* more than doubled to $3.5 billion
  • 2013 Core EPS guidance increased to between $6.20 and $6.40; GAAP EPS to between $5.10 and $5.30
   
                                 

Table 1. Summary Financial Results

Second Quarter

     

 

 

First Half

   

(Dollars in Millions, except per share data)

2013

 

2012

 

Change

 

2013

 

2012

 

Change

                         

Revenues

 

$21,815

   

$20,005

 

9%

   

$40,708

   

$39,388

 

3%

                       

Non-GAAP*

                     

Core Operating Earnings

 

$2,028

   

$1,787

 

13%

   

$3,895

   

$3,560

 

9%

Core Operating Margin

9.3%

 

8.9%

 

0.4 Pts

 

9.6%

 

9.0%

 

0.6 Pts

Core Earnings Per Share

 

$1.67

   

$1.48

 

13%

   

$3.40

   

$2.88

 

18%

Operating Cash Flow Before Pension Contributions

 

$3,480

   

$1,671

 

108%

   

$4,004

   

$2,508

 

60%

GAAP

                     

Earnings From Operations

 

$1,716

   

$1,542

 

11%

   

$3,244

   

$3,107

 

4%

Operating Margin

7.9%

 

7.7%

 

0.2 Pts

 

8.0%

 

7.9%

 

0.1 Pts

Net Earnings

 

$1,088

   

$967

 

13%

   

$2,194

   

$1,890

 

16%

Earnings Per Share

 

$1.41

   

$1.27

 

11%

   

$2.85

   

$2.49

 

14%

Operating Cash Flow

 

$3,467

   

$908

 

282%

   

$3,991

   

$1,745

 

129%

* 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 begin on page 6, "Non-GAAP Measures Disclosures."

The Boeing Company (NYSE: BA) reported second-quarter core earnings per share (non-GAAP) increased 13 percent* to $1.67, driven by strong performance across the company's businesses (Table 1). Second-quarter core operating earnings (non-GAAP) also increased 13 percent* to $2.0 billion from the same period of the prior year. Second-quarter revenue was $21.8 billion, GAAP earnings from operations was $1.7 billion and earnings per share was $1.41. Core earnings per share guidance increased to between $6.20 and $6.40 and GAAP earnings per share guidance increased to between $5.10 and $5.30, reflecting the strong performance. The company also increased its revenue guidance to between $83 and $86 billion on higher Defense, Space & Security revenues, and reaffirmed its 2013 operating cash flow outlook.

"Continued strong core operating performance drove higher earnings, revenue and operating cash flow during the quarter, and we returned significant value to shareholders through share repurchases and increased dividends," said Boeing Chairman, President and CEO Jim McNerney. "We also further strengthened our market-leading position in commercial airplanes with the successful launch of the 787-10 and $40 billion of new orders, while our defense, space and security business delivered improved margins and market share in a tough market. Overall, our strong first-half performance and positive outlook allows us to raise our 2013 earnings and revenue guidance, and our team remains intensely focused on execution, productivity and quality to meet our customer commitments and further drive growth."

 
                       

Table 2. Cash Flow

Second Quarter

   

First Half

 

(Millions)

2013

 

2012

 

2013

 

2012

 

Operating Cash Flow Before Pension Contributions*

 

$3,480

   

$1,671

   

$4,004

   

$2,508

 

      Pension Contributions

 

($13)

   

($763)

   

($13)

   

($763)

 

Operating Cash Flow

 

$3,467

   

$908

   

$3,991

   

$1,745

 

    Less Additions to Property, Plant & Equipment

 

($455)

   

($356)

   

($976)

   

($780)

 

Free Cash Flow*

 

$3,012

   

$552

   

$3,015

   

$965

 

Operating cash flow in the quarter was $3.5 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 10.2 million shares for $1 billion and paid $0.4 billion in dividends, reflecting a 12 percent increase in dividends paid compared to the prior period.

             

Table 3. Cash, Marketable Securities and Debt Balances

Quarter-End

(Billions)

Q2 13

Q1 13

Cash

 

$8.7

   

$8.3

 

Marketable Securities1

 

$5.6

   

$3.5

 

   Total

 

$14.3

   

$11.8

 

Debt Balances:

   

The Boeing Company, net of intercompany loans to BCC

 

$7.0

   

$6.7

 

Boeing Capital Corporation, including intercompany loans

 

$2.6

   

$2.5

 

   Total Consolidated Debt

 

$9.6

   

$9.2

 
   

1

Marketable securities consists primarily of time deposits due within one year classified as "short-term investments."

Cash and investments in marketable securities totaled $14.3 billion at quarter-end (Table 3), up from $11.8 billion at the beginning of the quarter. Debt was $9.6 billion, up from $9.2 billion at the beginning of the quarter, primarily due to the issuance of new debt.

Total company backlog at quarter-end was a record $410 billion, up from $392 billion at the beginning of the quarter, and included net orders for the quarter of $40 billion.

Segment Results

Commercial Airplanes

                                 

Table 4. Commercial Airplanes

Second Quarter

     

 

First Half

       

(Dollars in Millions)

2013

 

2012

 

Change

 

2013

 

2012

 

Change

 
                         

Commercial Airplanes Deliveries

169

 

150

 

13%

 

306

 

287

 

7%

 
                         

Revenues

 

$13,624

   

$11,843

 

15%

   

$24,314

   

$22,780

 

7%

 

Earnings from Operations

 

$1,453

   

$1,211

 

20%

   

$2,672

   

$2,292

 

17 %

 

Operating Margins

10.7%

 

10.2%

 

0.5 Pts

 

11.0%

 

10.1%

 

0.9Pts

 

Boeing Commercial Airplanes second-quarter revenue increased to $13.6 billion on higher delivery volume. Second-quarter operating margin improved to 10.7%, reflecting lower R&D and the higher deliveries partially offset by the dilutive impact of 787 deliveries (Table 4).

During the quarter, the company completed the retrofit of 787 battery enhancements on previously delivered airplanes and delivered sixteen 787 airplanes. Also during the quarter, the 787-9 Dreamliner began final assembly and the launch of the 787-10 was announced.

Commercial Airplanes booked 481 net orders during the quarter. Backlog remains strong with nearly 4,800 airplanes valued at a record $339 billion.

Boeing Defense, Space & Security

                                           

Table 5. Defense, Space & Security

Second Quarter

     

First Half

   

(Dollars in Millions)

2013

 

2012

 

Change

 

2013

 

2012

 

Change

Revenues

                     

Boeing Military Aircraft

 

$3,889

     

$4,050

   

(4)%

     

$7,998

     

$8,272

   

(3)%

 

Network & Space Systems

 

$2,049

     

$1,960

   

5%

     

$4,009

     

$3,832

   

5%

 

Global Services & Support

 

$2,248

     

$2,182

   

3%

     

$4,289

     

$4,321

   

(1)%

 

Total BDS Revenues

 

$8,186

     

$8,192

   

     

$16,296

     

$16,425

   

(1)%

 

Earnings from Operations

                     

Boeing Military Aircraft

 

$373

     

$353

   

6%

     

$803

     

$752

   

7%

 

Network & Space Systems

 

$137

     

$136

   

1%

     

$293

     

$245

   

20%

 

Global Services & Support

 

$266

     

$259

   

3%

     

$512

     

$493

   

4%

 

Total BDS Earnings from Operations

 

$776

     

$748

   

4%

     

$1,608

     

$1,490

   

8%

 

Operating Margins

9.5%

   

9.1%

   

0.4 Pts

   

9.9%

   

9.1%

   

0.8 Pts

 

Boeing Defense, Space & Security's second-quarter revenue was $8.2 billion, while operating margin was 9.5 percent (Table 5).

Boeing Military Aircraft (BMA) second-quarter revenue was $3.9 billion, primarily reflecting lower delivery volume. Operating margin increased to 9.6 percent, as the prior year included an inventory adjustment on A-160. During the quarter, BMA was awarded CH-47 Chinook and V-22 Osprey multi-year contracts.

Network & Space Systems (N&SS) second-quarter revenue was $2.0 billion, reflecting higher revenue in commercial satellites and the Space Launch System program. Operating margin was 6.7 percent, reflecting lower earnings in electronic & information solutions. During the quarter, N&SS was awarded a contract by ViaSat to design and deliver one 702HP spacecraft and was also awarded a contract for four 702MP satellites for Intelsat S.A.

Global Services & Support (GS&S) second-quarter revenue was $2.2 billion, due to higher volume in maintenance, modifications & upgrades. Operating margin was 11.8 percent, reflecting strong performance. During the quarter, GS&S was awarded a contract by the Royal Netherlands Air Force for maintenance and spare parts for Chinook and Apache helicopters.

Backlog at Defense, Space & Security increased to $71 billion, of which 37 percent represents orders with international customers.

Additional Financial Information

 
                                 

Table 6. Additional Financial Information

 

Second Quarter

 

First Half

(Dollars in Millions)

 

2013

 

2012

 

2013

 

2012

Revenues

               

Boeing Capital Corporation

   

$104

     

$113

     

$209

     

$238

 

Other segment

   

$27

     

$28

     

$54

     

$52

 

Unallocated items and eliminations

   

($126)

     

($171)

     

($165)

     

($107)

 

Earnings from Operations

               

Boeing Capital Corporation

   

$19

     

$39

     

$63

     

$72

 

Other segment expense

   

($43)

     

($64)

     

($101)

     

($143)

 

  Unallocated items and eliminations included in core operating earnings

   

($177)

     

($147)

     

($347)

     

($151)

 

  Unallocated pension/postretirement expense

   

($312)

     

($245)

     

($651)

     

($453)

 

Other income, net

   

$13

     

$10

     

$22

     

$22

 

Interest and debt expense

   

($96)

     

($106)

     

($195)

     

($220)

 

Effective tax rate

 

33.4%

   

33.1%

   

28.6%

   

35.0%

 

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. Unallocated items and eliminations included in core operating earnings increased in the second quarter of 2013 due to higher deferred compensation expense as a result of stock price appreciation. Total pension expense for the second quarter was $753 million, up from $593 million in the same period last year.

Outlook

The company's 2013 financial guidance (Table 7) has been updated to reflect continued strong performance in both businesses, generating an expected 7 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*

$6.20 - 6.40

        Earnings Per Share

$5.10 - 5.30

          Operating Cash Flow Before Pension Contributions*

> $8

     Operating Cash Flow 1

> $6.5

   

Boeing Commercial Airplanes

 

Deliveries 2

635 - 645

  Revenue

$51 - 53

  Operating Margin

> 9.5%

   

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

~ 10.5%

   

Total BDS Operating Margin

> 9.0%

   

Boeing Capital Corporation

 

  Portfolio Size

Lower

  Revenue

~ $0.3

  Pre-Tax Earnings

~ $0.05

   

Research & Development

~ $3.3

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 begin on page 6, "Non-GAAP Measures Disclosures."

Core earnings per share guidance for 2013 increased to between $6.20 and $6.40, up from between $6.10 and $6.30, and earnings per share guidance increased to between $5.10 and $5.30, up from between $5.00 and $5.20, both reflecting the strong operating performance. Total company 2013 revenue increased to between $83 and $86 billion, from between $82 and $85 billion, on higher Defense, Space & Security revenue.

Commercial Airplanes' operating margin increased to greater than 9.5 percent, up from approximately 9.5 percent.

Defense, Space & Security's revenue guidance increased to between $31.5 and $32.5 billion, from between $30.5 and $31.5 billion, reflecting international volume and mix.

Research and development expense for 2013 is now expected to be approximately $3.3 billion, down from approximately $3.4 billion. Capital expenditures for 2013 is revised to approximately $2.3 billion, down from between $2.3 and $2.5 billion. The 2013 effective tax rate is now expected to be approximately 31 percent, up from approximately 30 percent.

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.

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

 

The Boeing Company and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

 

                               
 

Six months ended
June 30

 

Three months ended
June 30

(Dollars in millions, except per share data)

2013

   

2012

   

2013

   

2012

 

Sales of products

 

$35,556

     

$34,026

     

$19,238

     

$17,341

 

Sales of services

5,152

   

5,362

   

2,577

   

2,664

 

Total revenues

40,708

   

39,388

   

21,815

   

20,005

 
               

Cost of products

(30,165)

   

(28,420)

   

(16,437)

   

(14,759)

 

Cost of services

(4,004)

   

(4,342)

   

(1,995)

   

(1,962)

 

Boeing Capital interest expense

(37)

   

(58)

   

(18)

   

(25)

 

Total costs and expenses

(34,206)

   

(32,820)

   

(18,450)

   

(16,746)

 
 

6,502

   

6,568

   

3,365

   

3,259

 

Income from operating investments, net

88

   

91

   

43

   

45

 

General and administrative expense

(1,900)

   

(1,858)

   

(929)

   

(903)

 

Research and development expense, net

(1,468)

   

(1,692)

   

(763)

   

(857)

 

Gain/(loss) on dispositions, net

22

   

(2)

         

(2)

 

Earnings from operations

3,244

   

3,107

   

1,716

   

1,542

 

Other income, net

22

   

22

   

13

   

10

 

Interest and debt expense

(195)

   

(220)

   

(96)

   

(106)

 

Earnings before income taxes

3,071

   

2,909

   

1,633

   

1,446

 

Income tax expense

(878)

   

(1,018)

   

(546)

   

(479)

 

Net earnings from continuing operations

2,193

   

1,891

   

1,087

   

967

 

Net gain/(loss) on disposal of discontinued operations, net of taxes of $0, $1, $0 and $0

1

   

(1)

   

1

       

Net earnings

 

$2,194

     

$1,890

     

$1,088

     

$967

 

Basic earnings per share from continuing operations

 

$2.88

     

$2.51

     

$1.43

     

$1.28

 

Net gain/(loss) on disposal of discontinued operations, net of taxes

             

Basic earnings per share

 

$2.88

     

$2.51

     

$1.43

     

$1.28

 

Diluted earnings per share from continuing operations

 

$2.85

     

$2.49

     

$1.41

     

$1.27

 

Net gain/(loss) on disposal of discontinued operations, net of taxes

             

Diluted earnings per share

 

$2.85

     

$2.49

     

$1.41

     

$1.27

 

Cash dividends paid per share

 

$0.97

     

$0.88

     

$0.485

     

$0.44

 

Weighted average diluted shares (millions)

770.1

   

760.7

   

771.8

   

762.0

 

 

The Boeing Company and Subsidiaries

Consolidated Statements of Financial Position

(Unaudited)

 

               

(Dollars in millions, except per share data)

June 30
2013

   

December 31
2012

Assets

     

Cash and cash equivalents

 

$8,694

     

$10,341

 

Short-term and other investments

5,631

   

3,217

 

Accounts receivable, net

6,406

   

5,608

 

Current portion of customer financing, net

320

   

364

 

Deferred income taxes

25

   

28

 

Inventories, net of advances and progress billings

40,234

   

37,751

 

Total current assets

61,310

   

57,309

 

Customer financing, net

3,991

   

4,056

 

Property, plant and equipment, net of accumulated depreciation of $14,717 and $14,645

9,814

   

9,660

 

Goodwill

5,043

   

5,035

 

Acquired intangible assets, net

3,011

   

3,111

 

Deferred income taxes

6,307

   

6,753

 

Investments

1,166

   

1,180

 

Other assets, net of accumulated amortization of $464 and $504

1,449

   

1,792

 

Total assets

 

$92,091

     

$88,896

 

Liabilities and equity

     

Accounts payable

 

$10,437

     

$9,394

 

Accrued liabilities

12,412

   

12,995

 

Advances and billings in excess of related costs

18,145

   

16,672

 

Deferred income taxes and income taxes payable

5,072

   

4,485

 

Short-term debt and current portion of long-term debt

883

   

1,436

 

Total current liabilities

46,949

   

44,982

 

Accrued retiree health care

7,431

   

7,528

 

Accrued pension plan liability, net

20,070

   

19,651

 

Non-current income taxes payable

275

   

366

 

Other long-term liabilities

1,039

   

1,429

 

Long-term debt

8,695

   

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

4,181

   

4,122

 

Treasury stock, at cost - 258,226,771 and 256,630,628 shares

(16,412)

   

(15,937)

 

Retained earnings

31,490

   

30,037

 

Accumulated other comprehensive loss

(16,794)

   

(17,416)

 

     Total shareholders' equity

7,526

   

5,867

 

     Noncontrolling interest

106

   

100

 

     Total equity

7,632

   

5,967

 

     Total liabilities and equity

 

$92,091

     

$88,896

 

 

The Boeing Company and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 

               
 

Six months ended June 30

(Dollars in millions)

2013

   

2012

 

Cash flows – operating activities:

     

Net earnings

 

$2,194

     

$1,890

 

Adjustments to reconcile net earnings to net cash provided by operating activities:

     

Non-cash items –

     

Share-based plans expense

107

   

99

 

Depreciation and amortization

865

   

848

 

Investment/asset impairment charges, net

26

   

45

 

Customer financing valuation benefit

(5)

   

(1)

 

(Gain)/loss on disposal of discontinued operations

(1)

   

2

 

(Gain)/loss on dispositions, net

(22)

   

2

 

Other charges and credits, net

31

   

361

 

Excess tax benefits from share-based payment arrangements

(47)

   

(39)

 

Changes in assets and liabilities –

     

Accounts receivable

(550)

   

(310)

 

Inventories, net of advances and progress billings

(2,614)

   

(2,737)

 

Accounts payable

848

   

742

 

Accrued liabilities

(682)

   

(594)

 

Advances and billings in excess of related costs

1,472

   

(152)

 

Income taxes receivable, payable and deferred

608

   

705

 

Other long-term liabilities

(60)

   

(15)

 

Pension and other postretirement plans

1,638

   

686

 

Customer financing, net

188

   

216

 

Other

(5)

   

(3)

 

   Net cash provided by operating activities

3,991

   

1,745

 

Cash flows – investing activities:

     

Property, plant and equipment additions

(976)

   

(780)

 

Property, plant and equipment reductions

44

   

16

 

Acquisitions, net of cash acquired

(26)

   

(18)

 

Contributions to investments

(7,045)

   

(6,396)

 

Proceeds from investments

4,632

   

3,596

 

Purchase of distribution rights

     

(6)

 

   Net cash used by investing activities

(3,371)

   

(3,588)

 

Cash flows – financing activities:

     

New borrowings

531

   

24

 

Debt repayments

(1,361)

   

(1,233)

 

Repayments of distribution rights financing

(139)

   

(72)

 

Stock options exercised, other

484

   

71

 

Excess tax benefits from share-based payment arrangements

47

   

39

 

Employee taxes on certain share-based payment arrangements

(57)

   

(68)

 

Common shares repurchased

(1,000)

     

Dividends paid

(735)

   

(658)

 

   Net cash used by financing activities

(2,230)

   

(1,897)

 

Effect of exchange rate changes on cash and cash equivalents

(37)

   

(4)

 

Net decrease in cash and cash equivalents

(1,647)

   

(3,744)

 

Cash and cash equivalents at beginning of year

 

$10,341

     

$10,049

 

Cash and cash equivalents at end of period

 

$8,694

     

$6,305

 

 

The Boeing Company and Subsidiaries

Summary of Business Segment Data

(Unaudited)

 

                               
 

Six months ended
June 30

 

Three months ended
June 30

(Dollars in millions)

2013

   

2012

   

2013

   

2012

 

Revenues:

             

Commercial Airplanes

 

$24,314

     

$22,780

     

$13,624

     

$11,843

 

Defense, Space & Security:

             

Boeing Military Aircraft

7,998

   

8,272

   

3,889

   

4,050

 

Network & Space Systems

4,009

   

3,832

   

2,049

   

1,960

 

Global Services & Support

4,289

   

4,321

   

2,248

   

2,182

 

Total Defense, Space & Security

16,296

   

16,425

   

8,186

   

8,192

 

Boeing Capital

209

   

238

   

104

   

113

 

Other segment

54

   

52

   

27

   

28

 

Unallocated items and eliminations

(165)

   

(107)

   

(126)

   

(171)

 

Total revenues

 

$40,708

     

$39,388

     

$21,815

     

$20,005

 

Earnings from operations:

             

Commercial Airplanes

 

$2,672

     

$2,292

     

$1,453

     

$1,211

 

Defense, Space & Security:

             

Boeing Military Aircraft

803

   

752

   

373

   

353

 

Network & Space Systems

293

   

245

   

137

   

136

 

Global Services & Support

512

   

493

   

266

   

259

 

Total Defense, Space & Security

1,608

   

1,490

   

776

   

748

 

Boeing Capital

63

   

72

   

19

   

39

 

Other segment

(101)

   

(143)

   

(43)

   

(64)

 

Unallocated items and eliminations

(998)

   

(604)

   

(489)

   

(392)

 

Earnings from operations

3,244

   

3,107

   

1,716

   

1,542

 

Other income, net

22

   

22

   

13

   

10

 

Interest and debt expense

(195)

   

(220)

   

(96)

   

(106)

 

Earnings before income taxes

3,071

   

2,909

   

1,633

   

1,446

 

Income tax expense

(878)

   

(1,018)

   

(546)

   

(479)

 

Net earnings from continuing operations

2,193

   

1,891

   

1,087

   

967

 

Net gain/(loss) on disposal of discontinued operations, net of taxes of $0, $1, $0 and $0

1

   

(1)

   

1

       

Net earnings

 

$2,194

     

$1,890

     

$1,088

     

$967

 
               

Research and development expense, net:

             

Commercial Airplanes

 

$865

     

$1,104

     

$446

     

$560

 

Defense, Space & Security

579

   

562

   

307

   

281

 

Other

24

   

26

   

10

   

16

 

Total research and development expense, net

 

$1,468

     

$1,692

     

$763

     

$857

 
               

Unallocated items and eliminations:

             

Share-based plans

 

($53)

     

($41)

   

(22)

   

(19)

 

Deferred compensation

(102)

   

(34)

   

(46)

   

2

 

Capitalized interest

(34)

   

(37)

   

(17)

   

(16)

 

Eliminations and other

(158)

   

(39)

   

(92)

   

(114)

 

   Sub-total (included in core operating earnings)

(347)

   

(151)

   

(177)

   

(147)

 

Pension

(689)

   

(404)

   

(331)

   

(215)

 

Postretirement

38

   

(49)

   

19

   

(30)

 

Total unallocated items and eliminations

 

($998)

     

($604)

     

($489)

     

($392)

 

 

The Boeing Company and Subsidiaries
Operating and Financial Data

(Unaudited)

 

                             

Deliveries

 

Six months ended June 30

 

Three months ended June 30

Commercial Airplanes

 

2013

     

2012

   

2013

     

2012

 

737

 

218

     

208

   

116

     

109

 

747

 

12

     

13

   

6

     

7

 

767

 

12

     

13

   

8

     

6

 

777

 

47

     

42

   

23

     

22

 

787

 

17

 

(1)

 

11

   

16

 

(1)

 

6

 

Total

 

306

     

287

   

169

     

150

 

Note: Deliveries under operating lease are identified by parentheses.

   
                     

Defense, Space & Security

                   

Boeing Military Aircraft

                   

F/A-18 Models

 

24

     

24

   

12

     

12

 

F-15E Eagle

 

3

     

8

         

3

 

C-17 Globemaster III

 

6

     

5

   

3

     

3

 

CH-47 Chinook

 

17

     

22

   

8

     

12

 

AH-64 Apache

 

20

     

3

   

5

     

3

 

P-8 Models

 

5

     

1

   

3

       

AEW&C

         

2

           

2

 
                     

Network & Space Systems

                   

Commercial and Civil Satellites

 

1

     

1

               

Military Satellites

         

3

           

1

 
                     
 
                         

Contractual backlog (Dollars in billions)

 

June 30
2013

   

March 31
2013

   

December 31
2012

 

Commercial Airplanes

   

$337.7

     

$322.0

     

$317.3

 

Defense, Space & Security:

           

    Boeing Military Aircraft

 

26.5

   

26.6

   

29.2

 

    Network & Space Systems

 

10.2

   

9.6

   

10.1

 

    Global Services & Support

 

14.8

   

15.4

   

15.8

 

  Total Defense, Space & Security

 

51.5

   

51.6

   

55.1

 

Total contractual backlog

   

$389.2

     

$373.6

     

$372.4

 

Unobligated backlog

   

$21.1

     

$18.1

     

$17.9

 

Total backlog

   

$410.3

     

$391.7

     

$390.3

 

Workforce

 

172,200

   

173,100

   

174,400

 

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.

 
                                 
 

Six months ended June 30

 

Three months ended June 30

 
 

2013

 

2012

 

2013

 

2012

 

Revenues

 

$40,708

     

$39,388

     

$21,815

     

$20,005

   
                 

GAAP Earnings From Operations

 

$3,244

     

$3,107

     

$1,716

     

$1,542

   

GAAP Operating Margin

8.0%

   

7.9%

   

7.9%

   

7.7%

   
                 

Unallocated Pension/Postretirement Expense

 

$651

     

$453

     

$312

     

$245

   

Core Operating Earnings (non-GAAP)

 

$3,895

     

$3,560

     

$2,028

     

$1,787

   

Core Operating Margin (non-GAAP)

9.6%

   

9.0%

   

9.3%

   

8.9%

   
                 

GAAP Diluted Earnings Per Share

 

$2.85

     

$2.49

     

$1.41

     

$1.27

   
                 

Unallocated Pension/Postretirement Expense1

 

$0.55

     

$0.39

     

$0.26

     

$0.21

   
                 

Core Earnings Per Share (non-GAAP)

 

$3.40

     

$2.88

     

$1.67

     

$1.48

   
                 
                 

Weighted Average Diluted Shares (millions)

770.1

   

760.7

   

771.8

   

762.0

   

Increase in GAAP Earnings Per Share

14%

       

11%

       

Increase in Core Earnings Per Share

18%

       

13%

       
 

1 Earnings per share impact is presented net of the federal statutory tax rate of 35.0 percent.

The Boeing Company and Subsidiaries
R
econciliation 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

   

$5.10 - 5.30

   

Unallocated Pension/Postretirement Expense

 

0.77

 

a

1.10

 

b

Core Earnings Per Share (non-GAAP)

   

$5.88

   

$6.20 - 6.40

   
           

Weighted average diluted shares (millions)

 

763.8

   

768.0

   

2013 Change in GAAP Earnings per Share

     

~ 2%

   

2013 Increase in Core Earnings per Share

     

~ 7%

   
   
   

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.

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