Boeing Reports
Third-Quarter Results; Raises Cash Flow and EPS Guidance
CHICAGO, Oct. 25, 2017
--
- Revenue of $24.3 billion,
including a record 202 commercial aircraft deliveries
- GAAP EPS of $3.06 and core EPS
(non-GAAP)* of $2.72 on solid
execution
- Strong operating cash flow of $3.4
billion; repurchased 11 million shares for $2.5 billion
- Backlog remains robust at $474
billion, including nearly 5,700 aircraft in commercial
airplane orders
- Cash flow and EPS guidance raised; segment guidance
updated
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Table 1. Summary Financial Results |
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Third
Quarter |
|
|
Nine Months |
|
(Dollars in Millions, except per share
data) |
|
2017 |
2016 |
Change |
2017 |
2016 |
Change |
|
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Revenues |
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$24,309 |
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$23,898 |
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2% |
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$68,024 |
|
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$71,285 |
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(5)% |
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GAAP |
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Earnings From Operations |
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$2,689 |
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$2,282 |
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18% |
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$7,248 |
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$3,651 |
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99% |
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Operating Margin |
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11.1% |
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9.5% |
|
1.6 Pts |
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10.7% |
|
5.1% |
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5.6 Pts |
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Net Earnings |
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$1,853 |
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$2,279 |
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(19)% |
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$5,065 |
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$3,264 |
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55% |
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Earnings Per Share |
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$3.06 |
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$3.60 |
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(15)% |
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$8.27 |
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$5.04 |
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64% |
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Operating Cash Flow |
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$3,396 |
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$3,202 |
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6% |
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$10,440 |
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$7,667 |
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36% |
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Non-GAAP* |
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Core Operating Earnings |
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$2,373 |
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$2,194 |
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8% |
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$6,294 |
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$3,400 |
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85% |
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Core Operating Margin |
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9.8% |
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9.2% |
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0.6 Pts |
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9.3% |
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4.8% |
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4.5 Pts |
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Core Earnings Per Share |
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$2.72 |
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$3.51 |
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(23)% |
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$7.26 |
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$4.79 |
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52% |
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* Non-GAAP measures. Complete
definitions of Boeing's non-GAAP measures are on page 6, "Non-GAAP
Measures Disclosures." |
The Boeing Company [NYSE: BA] reported third-quarter revenue of
$24.3 billion with GAAP earnings
per share of $3.06 and core earnings
per share (non-GAAP)* of $2.72
reflecting strong deliveries, services and delivery mix, and
overall solid execution (Table 1).
The company's cash flow guidance is increased to $12.5 billion from $12.25
billion, driven by improved performance. Full year EPS
guidance is increased to between $11.20 and
$11.40 from $11.10 and $11.30
and core earnings per share (non-GAAP)* guidance is increased to
between $9.90 and $10.10 from
$9.80 and $10.00 driven by a
lower-than-expected tax rate. Full year segment guidance is
updated, reflecting the realignment of the company's services
businesses into Boeing Global Services (BGS).
"Our teams across all three business segments are driving
execution with a focus on both productivity and growth, which has
enabled Boeing to deliver solid third quarter financial results,
grow cash flow, and raise our 2017 outlook," said Chairman,
President and Chief Executive Officer Dennis Muilenburg.
"In the third quarter we successfully launched our newest
business segment, Boeing Global Services, leveraging our unique
One Boeing advantages to offer
complete lifecycle support across the commercial, defense and space
sectors. We achieved a number of key milestones in the quarter with
the delivery of a record 202 commercial airplanes, including 24 737
MAXs as we continue the smooth introduction of that airplane. On
the defense side, we booked $6
billion in new orders, including an initial contract award
for the Ground Based Strategic Deterrent program and an award from
the U.S. Navy for 14 F/A-18 Super Hornet aircraft."
"We remain focused on accelerating productivity, quality and
safety improvements across the company, executing on our future
development programs, and capturing new business to ensure our
continued growth."
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Table 2. Cash Flow |
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Third
Quarter |
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Nine Months |
(Millions) |
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2017 |
2016 |
2017 |
2016 |
Operating Cash Flow |
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$3,396 |
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$3,202 |
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$10,440 |
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$7,667 |
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Less Additions to Property, Plant &
Equipment |
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($399) |
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($595) |
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($1,304) |
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($2,014) |
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Free Cash Flow* |
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$2,997 |
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$2,607 |
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$9,136 |
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$5,653 |
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* Non-GAAP measures. Complete
definitions of Boeing's non-GAAP measures are on page 6, "Non-GAAP
Measures Disclosures." |
Operating cash flow in the quarter of $3.4 billion was driven by solid operating
performance and favorable timing of receipts and expenditures
(Table 2). During the quarter, the company repurchased 11 million
shares for $2.5 billion, leaving
$6.5 billion remaining under the
current repurchase authorization. The company also paid
$0.9 billion in dividends in the
quarter, reflecting a 30 percent increase in dividends per share
compared to the same period of the prior year.
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Table 3. Cash, Marketable Securities and Debt
Balances |
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Quarter-End |
(Billions) |
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Q3 17 |
Q2 17 |
Cash |
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$8.6 |
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$8.7 |
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Marketable Securities1 |
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$1.4 |
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$1.6 |
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Total |
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$10.0 |
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$10.3 |
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Debt Balances: |
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The Boeing Company, net of intercompany loans to
BCC |
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$7.8 |
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$7.8 |
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Boeing Capital, including intercompany loans |
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$3.0 |
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$3.0 |
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Total Consolidated Debt |
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$10.8 |
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$10.8 |
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1 Marketable securities
consists primarily of time deposits due within one year classified
as "short-term investments." |
Cash and investments in marketable securities totaled
$10.0 billion, down slightly from
$10.3 billion at the beginning of the
quarter (Table 3). Debt was $10.8
billion, unchanged from the beginning of the quarter.
Total company backlog at quarter-end was $474 billion, down from $482 billion at the beginning of the quarter, and
included net orders for the quarter of $16
billion.
Segment Results
Commercial Airplanes
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Table 4. Commercial Airplanes |
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Third
Quarter |
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Nine Months |
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(Dollars in Millions) |
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2017 |
2016 |
Change |
2017 |
2016 |
Change |
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Commercial Airplanes Deliveries |
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202 |
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188 |
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7% |
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554 |
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563 |
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(2)% |
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Revenues1 |
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$14,982 |
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$15,200 |
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(1)% |
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$41,263 |
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$43,630 |
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(5)% |
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Earnings from Operations1 |
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$1,483 |
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$1,293 |
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15% |
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$3,648 |
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$804 |
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354% |
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Operating Margin1 |
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9.9% |
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8.5% |
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1.4 Pts |
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8.8% |
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1.8% |
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7.0 Pts |
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1 Prior year
results have been adjusted to reflect the realignment of the
services business |
Commercial Airplanes third-quarter revenue was $15.0 billion on planned production rates and
delivery mix (Table 4). Third-quarter operating margin increased to
9.9 percent, reflecting higher 787 margins and strong operating
performance on production programs, partially offset by additional
cost growth of $256 million on the
KC-46 Tanker program due to incorporating changes into initial
production aircraft as we progress through late-stage testing and
the certification process.
During the quarter, Commercial Airplanes delivered a record 202
airplanes, including 24 737 MAX 8 airplanes. The production rate
increased to 47 per month on the 737 program, and we confirmed
plans to increase the 787 production rate to 14 per month in 2019.
Development on 777X is on track as production began on the first
complete wing for structural test.
Commercial Airplanes booked 117 net orders during the quarter.
Backlog remains robust with nearly 5,700 airplanes valued at
$412 billion.
Defense, Space & Security
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Table 5. Defense, Space & Security |
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Third
Quarter |
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Nine Months |
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(Dollars in Millions) |
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2017 |
2016 |
Change |
2017 |
2016 |
Change |
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Revenues1 |
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$5,470 |
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$5,751 |
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(5)% |
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$15,520 |
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$17,281 |
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(10)% |
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Earnings from Operations1 |
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$559 |
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$564 |
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(1)% |
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$1,670 |
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$1,443 |
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16% |
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Operating Margin1 |
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10.2% |
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9.8% |
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0.4Pts |
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10.8% |
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8.4% |
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2.4 Pts |
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1 Prior year
results have been adjusted to reflect the realignment of the
services business |
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Defense, Space & Security (BDS) third-quarter revenue was
$5.5 billion on lower planned
deliveries and mix (Table 5). Third-quarter operating margin
increased to 10.2 percent, reflecting solid performance and mix,
partially offset by KC-46 Tanker cost growth of $73 million.
During the quarter, BDS was awarded contracts from the U.S. Air
Force for design of the new Ground-Based Strategic Deterrent
defense system and preliminary design of the next presidential
aircraft. The U.S. Navy awarded BDS a contract for 14 F/A-18 Super
Hornets during the third quarter. Additionally, BDS was selected to
design and build seven medium earth orbit satellites for SES.
Backlog at Defense, Space & Security was $46 billion, of which 35 percent represents
orders from international customers.
Global Services
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Table 6. Global Services |
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Third
Quarter |
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Nine Months |
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(Dollars in Millions) |
|
2017 |
2016 |
Change |
2017 |
2016 |
Change |
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Revenues |
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$3,568 |
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|
$3,506 |
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2% |
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$10,638 |
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$10,508 |
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1% |
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Earnings from Operations |
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$506 |
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$524 |
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(3)% |
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$1,639 |
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$1,609 |
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2% |
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Operating Margin |
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14.2% |
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14.9% |
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(0.7) Pts |
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15.4% |
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15.3% |
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0.1 Pts |
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Global Services third-quarter revenue increased to $3.6 billion, primarily driven by higher
commercial parts revenue, partially offset by timing of government
services (Table 6). Third-quarter operating margin was 14.2 percent
reflecting product and services mix.
During the quarter, Global Services was awarded a contract from
the Defense Logistics Agency to supply F/A-18 E/F spare parts, and
a contract from the Italian Air Force to provide performance-based
logistics services to support the KC-767A tanker aircraft. More
than 40 commercial airline customers signed up for our digital
navigation applications in the quarter. Additionally, Global
Services continues to capture new commercial and government
customers through expanded offerings, including those powered by
Boeing AnalytX.
Additional Financial Information
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Table 7. Additional Financial
Information |
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Third
Quarter |
|
Nine Months |
(Dollars in Millions) |
|
2017 |
2016 |
2017 |
2016 |
Revenues |
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Boeing Capital |
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$70 |
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$63 |
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|
$234 |
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$211 |
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Unallocated items, eliminations and other |
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$219 |
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($622) |
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|
$369 |
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|
($345) |
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Earnings from Operations |
|
|
|
|
|
Boeing Capital |
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|
$23 |
|
|
$13 |
|
|
$87 |
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|
$36 |
|
Unallocated pension/postretirement |
|
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$316 |
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|
$88 |
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$954 |
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$251 |
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Other unallocated items and eliminations |
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($198) |
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($200) |
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($750) |
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($492) |
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Other income, net |
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$45 |
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$2 |
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$94 |
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$41 |
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Interest and debt expense |
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($87) |
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($81) |
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($267) |
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($227) |
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Effective tax rate |
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30.0% |
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(3.4)% |
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28.4% |
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5.8% |
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At quarter-end, Boeing Capital's net portfolio balance was
$3.4 billion. Total pension expense
for the third quarter was $100
million, down from $453
million in the same period of the prior year. Revenue
increased in other unallocated items and eliminations primarily due
to timing of eliminations of intercompany aircraft deliveries,
including those accounted for under operating lease. Other
unallocated items and eliminations earnings decreased primarily due
to timing of eliminations of intercompany aircraft deliveries,
offset by higher deferred compensation. The effective tax rate for
the third quarter increased to 30.0 percent primarily due to
discrete tax benefits recorded in the prior year.
Outlook
The company's 2017 guidance is updated below (Table 8).
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Table 8. 2017 Financial Outlook |
Current |
|
Prior |
(Dollars in Billions, except per share
data) |
Guidance |
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Guidance |
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The Boeing Company |
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Revenue |
$90.5 - 92.5 |
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$90.5 - 92.5 |
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GAAP Earnings Per Share |
$11.20 - 11.40 |
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$11.10 - 11.30 |
Core Earnings Per Share* |
$9.90 - 10.10 |
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$9.80 - 10.00 |
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Operating Cash Flow |
~$12.5 |
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~$12.25 |
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Commercial Airplanes |
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Deliveries |
760 - 765 |
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760 - 765 |
Revenue |
$55.5 - 56.5 |
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N/A |
Operating Margin |
9.0% - 9.5 |
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N/A |
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Defense, Space & Security |
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Revenue |
$20.5 - 21.5 |
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N/A |
Operating Margin |
>10.5% |
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N/A |
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Global Services |
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Revenue |
$14.0 - 14.5 |
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N/A |
Operating
Margin |
15.0% - 15.5 |
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N/A |
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Boeing Capital |
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Portfolio Size |
Stable |
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Stable |
Revenue |
~$0.3 |
|
~$0.3 |
Pre-Tax Earnings |
~$0.08 |
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~$0.08 |
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Research & Development |
~ $3.4 |
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~ $3.6 |
Capital Expenditures |
~ $2.0 |
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~ $2.0 |
Pension Expense 1 |
~ $0.6 |
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~ $0.6 |
Effective Tax Rate |
~ 28.5% |
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~ 29.0% |
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1 Approximately
($1.0) billion is expected to be recorded in unallocated items and
eliminations |
* Non-GAAP
measures. Complete definitions of Boeing's non-GAAP measures are on
page 6, "Non-GAAP Measures Disclosures." |
Non-GAAP Measures Disclosures
We supplement the reporting of our financial information
determined under Generally Accepted Accounting Principles in
the United States of America
(GAAP) with certain non-GAAP financial information. The non-GAAP
financial information presented excludes certain significant items
that may not be indicative of, or are unrelated to, results from
our ongoing business operations. We believe that these non-GAAP
measures provide investors with additional insight into the
company's ongoing business performance. These non-GAAP measures
should not be considered in isolation or as a substitute for the
related GAAP measures, and other companies may define such measures
differently. We encourage investors to review our financial
statements and publicly-filed reports in their entirety and not to
rely on any single financial measure. The following definitions are
provided:
Core Operating Earnings, Core Operating Margin and Core Earnings
Per Share
Core operating earnings is defined as GAAP earnings from
operations excluding unallocated pension and other
postretirement benefit 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 other postretirement benefit
expense. Unallocated pension and other postretirement
benefit expense represents the portion of pension and other
post-retirement costs that are not recognized by business segments
for segment reporting purposes. Pension costs, comprising service
and prior service costs computed in accordance with GAAP are
allocated to Commercial Airplanes and BGS businesses supporting
commercial customers. Pension costs allocated to BDS and BGS
businesses supporting government customers are computed in
accordance with U.S. Government Cost Accounting Standards (CAS),
which employ different actuarial assumptions and accounting
conventions than GAAP. CAS costs are allocable to government
contracts. Other postretirement benefit costs are allocated to all
business segments based on CAS, which is generally based on
benefits paid. Management uses core operating earnings, core
operating margin and core earnings/per share for purposes of
evaluating and forecasting underlying business performance.
Management believes these core earnings measures provide investors
additional insights into operational performance as they exclude
unallocated pension and post-retirement costs, which primarily
represent costs driven by market factors and costs not allocable to
government contracts. A reconciliation between the GAAP and
non-GAAP measures is provided on page 14.
Free Cash Flow
Free cash flow is defined as GAAP operating cash flow
without capital expenditures for property, plant and equipment
additions. Management believes free cash flow provides
investors with an important perspective on the cash available for
shareholders, debt repayment, and acquisitions after making the
capital investments required to support ongoing business operations
and long term value creation. Free cash flow does not represent the
residual cash flow available for discretionary expenditures as it
excludes certain mandatory expenditures such as repayment of
maturing debt. Management uses free cash flow as a measure to
assess both business performance and overall liquidity. Table 2
provides a reconciliation between GAAP operating cash flow and free
cash flow.
Caution Concerning
Forward-Looking Statements
This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995. Words such as "may," "should," "expects," "intends,"
"projects," "plans," "believes," "estimates," "targets,"
"anticipates," and similar expressions generally identify these
forward-looking statements. Examples of forward-looking statements
include statements relating to our future financial condition and
operating results, as well as any other statement that does not
directly relate to any historical or current fact. Forward-looking
statements are based on expectations and assumptions that we
believe to be reasonable when made, but that may not prove to be
accurate. These statements are not guarantees and are subject to
risks, uncertainties, and changes in circumstances that are
difficult to predict. Many factors could cause actual results to
differ materially and adversely from these forward-looking
statements. Among these factors are risks related to: (1) general
conditions in the economy and our industry, including those due to
regulatory changes; (2) our reliance on our commercial airline
customers; (3) the overall health of our aircraft production
system, planned production rate increases across multiple
commercial airline programs, our commercial development and
derivative aircraft programs, and our aircraft being subject to
stringent performance and reliability standards; (4) changing
budget and appropriation levels and acquisition priorities of the
U.S. government; (5) our dependence on U.S. government contracts;
(6) our reliance on fixed-price contracts; (7) our reliance on
cost-type contracts; (8) uncertainties concerning contracts that
include in-orbit incentive payments; (9) our dependence on our
subcontractors and suppliers, as well as the availability of raw
materials, (10) changes in accounting estimates; (11) changes in
the competitive landscape in our markets; (12) our non-U.S.
operations, including sales to non-U.S. customers; (13) potential
adverse developments in new or pending litigation and/or government
investigations; (14) customer and aircraft concentration in Boeing
Capital's customer financing portfolio; (15) changes in our ability
to obtain debt on commercially reasonable terms and at competitive
rates in order to fund our operations and contractual commitments;
(16) realizing the anticipated benefits of mergers, acquisitions,
joint ventures/strategic alliances or divestitures; (17) the
adequacy of our insurance coverage to cover significant risk
exposures; (18) potential business disruptions, including those
related to physical security threats, information technology or
cyber-attacks, epidemics, sanctions or natural disasters; (19) work
stoppages or other labor disruptions; (20) significant changes in
discount rates and actual investment return on pension assets; (21)
potential environmental liabilities; and (22) threats to the
security of our or our customers' information.
Additional information concerning these and other factors can be
found in our filings with the Securities and Exchange Commission,
including our most recent Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K. Any
forward-looking statement speaks only as of the date on which it is
made, and we assume no obligation to update or revise any
forward-looking statement, whether as a result of new information,
future events, or otherwise, except as required by law.
Contact: |
|
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Investor Relations: |
|
Maurita Sutedja or Ben Hackman (312) 544-2140 |
Communications: |
|
Allison Bone (312) 544-2002 |
The Boeing Company
and Subsidiaries |
Consolidated
Statements of Operations |
(Unaudited) |
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|
Nine months
ended
September 30 |
|
Three months
ended
September 30 |
(Dollars in millions, except per share
data) |
2017 |
|
2016 |
|
2017 |
|
2016 |
|
Sales of products |
|
$60,484 |
|
|
$63,563 |
|
|
$21,825 |
|
|
$21,494 |
|
Sales of services |
7,540 |
|
7,722 |
|
2,484 |
|
2,404 |
|
Total revenues |
68,024 |
|
71,285 |
|
24,309 |
|
23,898 |
|
|
|
|
|
|
Cost of products |
(49,856) |
|
(55,117) |
|
(18,050) |
|
(17,907) |
|
Cost of services |
(5,730) |
|
(6,163) |
|
(1,910) |
|
(1,983) |
|
Boeing Capital interest expense |
(53) |
|
(46) |
|
(27) |
|
(14) |
|
Total costs and expenses |
(55,639) |
|
(61,326) |
|
(19,987) |
|
(19,904) |
|
|
12,385 |
|
9,959 |
|
4,322 |
|
3,994 |
|
Income from operating investments, net |
169 |
|
220 |
|
49 |
|
69 |
|
General and administrative expense |
(2,888) |
|
(2,617) |
|
(915) |
|
(923) |
|
Research and development expense, net |
(2,418) |
|
(3,901) |
|
(767) |
|
(857) |
|
Loss on dispositions, net |
|
|
(10) |
|
|
|
(1) |
|
Earnings from operations |
7,248 |
|
3,651 |
|
2,689 |
|
2,282 |
|
Other income, net |
94 |
|
41 |
|
45 |
|
2 |
|
Interest and debt expense |
(267) |
|
(227) |
|
(87) |
|
(81) |
|
Earnings before income taxes |
7,075 |
|
3,465 |
|
2,647 |
|
2,203 |
|
Income tax (expense)/benefit |
(2,010) |
|
(201) |
|
(794) |
|
76 |
|
Net earnings |
|
$5,065 |
|
|
$3,264 |
|
|
$1,853 |
|
|
$2,279 |
|
|
|
|
|
|
Basic earnings per share |
|
$8.37 |
|
|
$5.09 |
|
|
$3.10 |
|
|
$3.64 |
|
|
|
|
|
|
Diluted earnings per share |
|
$8.27 |
|
|
$5.04 |
|
|
$3.06 |
|
|
$3.60 |
|
|
|
|
|
|
Cash dividends paid per share |
|
$4.26 |
|
|
$3.27 |
|
|
$1.42 |
|
|
$1.09 |
|
|
|
|
|
|
Weighted average diluted shares
(millions) |
612.8 |
|
647.9 |
|
606.3 |
|
632.7 |
|
The Boeing Company
and Subsidiaries |
Consolidated
Statements of Financial Position |
(Unaudited) |
|
|
|
|
|
|
|
|
(Dollars in millions, except per share
data) |
September 30
2017 |
|
December 31
2016 |
|
Assets |
|
|
Cash and cash equivalents |
|
$8,569 |
|
|
$8,801 |
|
Short-term and other investments |
1,463 |
|
1,228 |
|
Accounts receivable, net |
10,644 |
|
8,832 |
|
Current portion of customer financing, net |
435 |
|
428 |
|
Inventories, net of advances and progress
billings |
43,031 |
|
43,199 |
|
Total current assets |
64,142 |
|
62,488 |
|
Customer financing, net |
3,039 |
|
3,773 |
|
Property, plant and equipment, net of accumulated
depreciation of $17,401 and $16,883 |
12,712 |
|
12,807 |
|
Goodwill |
5,344 |
|
5,324 |
|
Acquired intangible assets, net |
2,523 |
|
2,540 |
|
Deferred income taxes |
298 |
|
332 |
|
Investments |
1,270 |
|
1,317 |
|
Other assets, net of accumulated amortization of
$509 and $497 |
1,679 |
|
1,416 |
|
Total assets |
|
$91,007 |
|
|
$89,997 |
|
Liabilities and equity |
|
|
Accounts payable |
|
$12,718 |
|
|
$11,190 |
|
Accrued liabilities |
14,008 |
|
14,691 |
|
Advances and billings in excess of related
costs |
26,695 |
|
23,869 |
|
Short-term debt and current portion of long-term
debt |
988 |
|
384 |
|
Total current liabilities |
54,409 |
|
50,134 |
|
Deferred income taxes |
2,884 |
|
1,338 |
|
Accrued retiree health care |
5,826 |
|
5,916 |
|
Accrued pension plan liability, net |
15,514 |
|
19,943 |
|
Other long-term liabilities |
1,449 |
|
2,221 |
|
Long-term debt |
9,780 |
|
9,568 |
|
Shareholders' equity: |
|
|
Common stock, par value $5.00 – 1,200,000,000
shares authorized; 1,012,261,159 shares issued |
5,061 |
|
5,061 |
|
Additional paid-in capital |
6,754 |
|
4,762 |
|
Treasury stock, at cost - 414,910,219 and
395,109,568 shares |
(41,745) |
|
(36,097) |
|
Retained earnings |
44,052 |
|
40,714 |
|
Accumulated other comprehensive loss |
(13,036) |
|
(13,623) |
|
Total shareholders' equity |
1,086 |
|
817 |
|
Noncontrolling interests |
59 |
|
60 |
|
Total equity |
1,145 |
|
877 |
|
Total liabilities and equity |
|
$91,007 |
|
|
$89,997 |
|
The Boeing Company
and Subsidiaries |
Consolidated
Statements of Cash Flows |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Nine months
ended
September 30 |
(Dollars in millions) |
2017 |
|
2016 |
|
Cash flows – operating
activities: |
|
|
Net earnings |
|
$5,065 |
|
|
$3,264 |
|
Adjustments to reconcile net earnings to net cash
provided by operating activities: |
|
|
Non-cash items – |
|
|
Share-based plans expense |
151 |
|
144 |
|
Depreciation and amortization |
1,487 |
|
1,364 |
|
Investment/asset impairment charges, net |
75 |
|
61 |
|
Customer financing valuation
expense/(benefit) |
4 |
|
(5) |
|
Loss on dispositions, net |
|
|
10 |
|
Other charges and credits, net |
190 |
|
219 |
|
Changes in assets and liabilities – |
|
|
Accounts receivable |
(1,983) |
|
(517) |
|
Inventories, net of advances and progress
billings |
254 |
|
4,334 |
|
Accounts payable |
778 |
|
1,366 |
|
Accrued liabilities |
112 |
|
82 |
|
Advances and billings in excess of related
costs |
2,828 |
|
(1,717) |
|
Income taxes receivable, payable and deferred |
1,465 |
|
(725) |
|
Other long-term liabilities |
25 |
|
(67) |
|
Pension and other postretirement plans |
(550) |
|
144 |
|
Customer financing, net |
635 |
|
(195) |
|
Other |
(96) |
|
(95) |
|
Net cash provided by operating
activities |
10,440 |
|
7,667 |
|
Cash flows – investing activities: |
|
|
Property, plant and equipment additions |
(1,304) |
|
(2,014) |
|
Property, plant and equipment reductions |
30 |
|
14 |
|
Contributions to investments |
(2,847) |
|
(928) |
|
Proceeds from investments |
2,612 |
|
956 |
|
Purchase of distribution rights |
(131) |
|
|
Other |
4 |
|
8 |
|
Net cash used by investing
activities |
(1,636) |
|
(1,964) |
|
Cash flows – financing activities: |
|
|
New borrowings |
876 |
|
1,323 |
|
Debt repayments |
(83) |
|
(836) |
|
Repayments of distribution rights and other asset
financing |
|
|
(24) |
|
Stock options exercised |
291 |
|
192 |
|
Employee taxes on certain share-based payment
arrangements |
(118) |
|
(83) |
|
Common shares repurchased |
(7,500) |
|
(6,501) |
|
Dividends paid |
(2,575) |
|
(2,084) |
|
Net cash used by financing
activities |
(9,109) |
|
(8,013) |
|
Effect of exchange rate changes on cash and cash
equivalents |
73 |
|
(6) |
|
Net decrease in cash and cash
equivalents |
(232) |
|
(2,316) |
|
Cash and cash equivalents at beginning of
year |
8,801 |
|
11,302 |
|
Cash and cash equivalents at end of
period |
|
$8,569 |
|
|
$8,986 |
|
The Boeing Company
and Subsidiaries |
Summary of Business
Segment Data |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months
ended
September 30 |
|
Three months
ended
September 30 |
(Dollars in millions) |
2017 |
|
2016 |
|
2017 |
|
2016 |
|
Revenues: |
|
|
|
|
Commercial Airplanes |
|
$41,263 |
|
|
$43,630 |
|
|
$14,982 |
|
|
$15,200 |
|
Defense, Space & Security |
15,520 |
|
17,281 |
|
5,470 |
|
5,751 |
|
Global Services |
10,638 |
|
10,508 |
|
3,568 |
|
3,506 |
|
Boeing Capital |
234 |
|
211 |
|
70 |
|
63 |
|
Unallocated items, eliminations and other |
369 |
|
(345) |
|
219 |
|
(622) |
|
Total revenues |
|
$68,024 |
|
|
$71,285 |
|
|
$24,309 |
|
|
$23,898 |
|
Earnings from operations: |
|
|
|
|
Commercial Airplanes |
|
$3,648 |
|
|
$804 |
|
|
$1,483 |
|
|
$1,293 |
|
Defense, Space & Security |
1,670 |
|
1,443 |
|
559 |
|
564 |
|
Global Services |
1,639 |
|
1,609 |
|
506 |
|
524 |
|
Boeing Capital |
87 |
|
36 |
|
23 |
|
13 |
|
Segment operating profit |
7,044 |
|
3,892 |
|
2,571 |
|
2,394 |
|
Unallocated items, eliminations and other |
204 |
|
(241) |
|
118 |
|
(112) |
|
Earnings from operations |
7,248 |
|
3,651 |
|
2,689 |
|
2,282 |
|
Other income, net |
94 |
|
41 |
|
45 |
|
2 |
|
Interest and debt expense |
(267) |
|
(227) |
|
(87) |
|
(81) |
|
Earnings before income taxes |
7,075 |
|
3,465 |
|
2,647 |
|
2,203 |
|
Income tax (expense)/benefit |
(2,010) |
|
(201) |
|
(794) |
|
76 |
|
Net earnings |
|
$5,065 |
|
|
$3,264 |
|
|
$1,853 |
|
|
$2,279 |
|
|
|
|
|
|
Research and development expense, net: |
|
|
|
|
Commercial Airplanes |
|
$1,755 |
|
|
$3,152 |
|
|
$538 |
|
|
$633 |
|
Defense, Space & Security |
599 |
|
666 |
|
207 |
|
201 |
|
Global Services |
101 |
|
126 |
|
38 |
|
41 |
|
Other |
(37) |
|
(43) |
|
(16) |
|
(18) |
|
Total research and development expense,
net |
|
$2,418 |
|
|
$3,901 |
|
|
$767 |
|
|
$857 |
|
|
|
|
|
|
Unallocated items, eliminations and
other |
|
|
|
|
Share-based plans |
|
($67) |
|
|
($50) |
|
|
($21) |
|
|
($9) |
|
Deferred compensation |
(174) |
|
(38) |
|
(78) |
|
(33) |
|
Amortization of previously capitalized
interest |
(72) |
|
(71) |
|
(21) |
|
(23) |
|
Eliminations and other unallocated items |
(437) |
|
(333) |
|
(78) |
|
(135) |
|
Sub-total (included in core operating
earnings) |
(750) |
|
(492) |
|
(198) |
|
(200) |
|
Pension |
808 |
|
129 |
|
275 |
|
50 |
|
Postretirement |
146 |
|
122 |
|
41 |
|
38 |
|
Total unallocated items, eliminations and
other |
|
$204 |
|
|
($241) |
|
|
$118 |
|
|
($112) |
|
The Boeing Company and
Subsidiaries
Notes to Condensed Consolidated Financial Statements
Summary of Business Segment Data
(Unaudited)
Effective July 1, 2017, we now
operate in four principal segments: Commercial Airplanes; Defense,
Space & Security, Global Services and Boeing Capital. The prior
period amounts have been reclassified to conform to the current
period's presentation as set forth below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended |
(Dollars in millions) |
06/30/17 |
|
03/31/17 |
|
12/31/16 |
|
09/30/16 |
|
06/30/16 |
|
03/31/16 |
|
Revenues: |
|
|
|
|
|
|
Commercial Airplanes |
|
$13,817 |
|
|
$12,464 |
|
|
$14,382 |
|
|
$15,200 |
|
|
$15,643 |
|
|
$12,787 |
|
Defense, Space & Security |
5,198 |
|
4,852 |
|
5,282 |
|
5,751 |
|
5,394 |
|
6,136 |
|
Global Services |
3,564 |
|
3,506 |
|
3,417 |
|
3,506 |
|
3,581 |
|
3,421 |
|
Boeing Capital |
72 |
|
92 |
|
87 |
|
63 |
|
84 |
|
64 |
|
Unallocated items, eliminations and other |
88 |
|
62 |
|
118 |
|
(622) |
|
53 |
|
224 |
|
Total revenues |
|
$22,739 |
|
|
$20,976 |
|
|
$23,286 |
|
|
$23,898 |
|
|
$24,755 |
|
|
$22,632 |
|
Earnings from operations: |
|
|
|
|
|
|
Commercial Airplanes |
|
$1,274 |
|
|
$891 |
|
|
$1,191 |
|
|
$1,293 |
|
|
($1,281) |
|
|
$792 |
|
Defense, Space & Security |
619 |
|
492 |
|
523 |
|
564 |
|
362 |
|
517 |
|
Global Services |
564 |
|
569 |
|
568 |
|
524 |
|
539 |
|
546 |
|
Boeing Capital |
25 |
|
39 |
|
23 |
|
13 |
|
18 |
|
5 |
|
Segment operating profit/(loss) |
2,482 |
|
1,991 |
|
2,305 |
|
2,394 |
|
(362) |
|
1,860 |
|
Unallocated items, eliminations and other |
53 |
|
33 |
|
(122) |
|
(112) |
|
(57) |
|
(72) |
|
Earnings/(loss) from operations |
2,535 |
|
2,024 |
|
2,183 |
|
2,282 |
|
(419) |
|
1,788 |
|
Other income/(loss), net |
27 |
|
22 |
|
(1) |
|
2 |
|
13 |
|
26 |
|
Interest and debt expense |
(93) |
|
(87) |
|
(79) |
|
(81) |
|
(73) |
|
(73) |
|
Earnings/(loss) before income taxes |
2,469 |
|
1,959 |
|
2,103 |
|
2,203 |
|
(479) |
|
1,741 |
|
Income tax (expense)/benefit |
(708) |
|
(508) |
|
(472) |
|
76 |
|
245 |
|
(522) |
|
Net earnings/(loss) |
|
$1,761 |
|
|
$1,451 |
|
|
$1,631 |
|
|
$2,279 |
|
|
($234) |
|
|
$1,219 |
|
|
|
|
|
|
|
|
Research and development expense, net: |
|
|
|
|
|
|
Commercial Airplanes |
|
$592 |
|
|
$625 |
|
|
$554 |
|
|
$633 |
|
|
$1,860 |
|
|
$659 |
|
Defense, Space & Security |
196 |
|
196 |
|
149 |
|
201 |
|
233 |
|
232 |
|
Global Services |
35 |
|
28 |
|
27 |
|
41 |
|
47 |
|
38 |
|
Other |
(10) |
|
(11) |
|
(4) |
|
(18) |
|
(13) |
|
(12) |
|
Total research and development expense,
net |
|
$813 |
|
|
$838 |
|
|
$726 |
|
|
$857 |
|
|
$2,127 |
|
|
$917 |
|
The Boeing Company
and Subsidiaries |
Operating and
Financial Data |
(Unaudited) |
|
Deliveries |
|
Nine months
ended
September 30 |
|
Three months
ended
September 30 |
|
Commercial Airplanes |
|
2017 |
|
2016 |
|
|
2017 |
|
2016 |
|
737 |
|
381 |
|
368 |
|
|
145 |
|
120 |
|
747 |
|
8 |
(1) |
8 |
|
(3) |
4 |
|
5 |
(3) |
767 |
|
7 |
|
10 |
|
|
2 |
|
5 |
|
777 |
|
58 |
|
73 |
|
|
16 |
|
22 |
|
787 |
|
100 |
|
104 |
|
|
35 |
|
36 |
|
Total |
|
554 |
|
563 |
|
|
202 |
|
188 |
|
Note: Deliveries under operating
lease are identified by parentheses. |
|
|
|
|
|
|
|
|
Defense, Space & Security |
|
|
|
|
|
|
|
AH-64 Apache (New) |
|
8 |
|
25 |
|
|
3 |
|
10 |
|
AH-64 Apache (Remanufactured) |
|
43 |
|
27 |
|
|
15 |
|
9 |
|
C-17 Globemaster III |
|
|
4 |
|
|
|
|
|
|
CH-47 Chinook (New) |
|
6 |
|
17 |
|
|
2 |
|
7 |
|
CH-47 Chinook (Renewed) |
|
28 |
|
23 |
|
|
9 |
|
7 |
|
F-15 Models |
|
11 |
|
11 |
|
|
4 |
|
4 |
|
F/A-18 Models |
|
18 |
|
20 |
|
|
6 |
|
6 |
|
P-8 Models |
|
14 |
|
13 |
|
|
5 |
|
4 |
|
Commercial and Civil Satellites |
|
3 |
|
3 |
|
|
|
|
2 |
|
Military Satellites |
|
|
|
2 |
|
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total backlog (Dollars in millions) |
|
|
|
|
|
September 30
2017 |
|
December 31
2016 |
Commercial Airplanes |
|
|
|
|
|
|
$412,185 |
|
$413,036 |
Defense, Space & Security |
|
|
|
|
|
45,852 |
|
44,825 |
Global Services |
|
|
|
|
|
16,251 |
|
15,631 |
Total backlog |
|
|
|
|
|
|
$474,288 |
|
$473,492 |
|
|
|
|
|
|
|
|
Contractual backlog |
|
|
|
|
|
|
$459,871 |
|
$458,277 |
Unobligated backlog |
|
|
|
|
|
|
$14,417 |
|
$15,215 |
Total backlog |
|
|
|
|
|
|
$474,288 |
|
$473,492 |
Workforce |
|
|
|
|
|
142,300 |
|
150,500 |
The Boeing Company and
Subsidiaries
Reconciliation of Non-GAAP Measures
(Unaudited)
The tables provided below reconcile the non-GAAP financial
measures core operating earnings, 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 |
|
Nine Months |
|
Guidance |
|
2017 |
2016 |
2017 |
2016 |
2017 |
Revenues |
|
$24,309 |
|
|
$23,898 |
|
|
$68,024 |
|
|
$71,285 |
|
|
|
|
|
|
|
|
GAAP Earnings From Operations |
|
$2,689 |
|
|
$2,282 |
|
|
$7,248 |
|
|
$3,651 |
|
|
|
|
|
|
|
|
Unallocated Pension Income |
|
($275) |
|
|
($50) |
|
|
($808) |
|
|
($129) |
|
|
Unallocated Other Postretirement Benefit
Income |
|
($41) |
|
|
($38) |
|
|
($146) |
|
|
($122) |
|
|
Unallocated Pension and Other Postretirement
Benefit Income |
|
($316) |
|
|
($88) |
|
|
($954) |
|
|
($251) |
|
~($1,220) |
Core Operating Earnings (non-GAAP) |
|
$2,373 |
|
|
$2,194 |
|
|
$6,294 |
|
|
$3,400 |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted Earnings Per Share |
|
$3.06 |
|
|
$3.60 |
|
|
$8.27 |
|
|
$5.04 |
|
$11.20 - 11.40 |
Unallocated Pension Income |
|
($0.45) |
|
|
($0.08) |
|
|
($1.31) |
|
|
($0.20) |
|
|
Unallocated Postretirement Benefit
Income |
|
($0.07) |
|
|
($0.06) |
|
|
($0.24) |
|
|
($0.19) |
|
($1.30) |
Provision for deferred income taxes on
adjustments (1) |
|
$0.18 |
|
|
$0.05 |
|
|
$0.54 |
|
|
$0.14 |
|
|
Core Earnings Per Share (non-GAAP) |
|
$2.72 |
|
|
$3.51 |
|
|
$7.26 |
|
|
$4.79 |
|
$9.90 - 10.10 |
|
|
|
|
|
|
Weighted Average Diluted Shares
(millions) |
606.3 |
|
632.7 |
|
612.8 |
|
647.9 |
|
~ 610 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The
income tax impact is calculated using the tax rate in effect for
the non-GAAP adjustments. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|