Close

Form 8-K BOEING CO For: Jul 27

FREE Breaking News Alerts from StreetInsider.com!

E-mail Address

StreetInsider.com Top Tickers, 4/23/2024

1. TSLA
2. SPY
3. GM
4. SPOT
5. AMZN
6. SHW
7. AAPL
8. IBM
9. MINN
10. NVDA


July 27, 2016 8:02 AM EDT


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K

 CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): July 27, 2016
 
THE BOEING COMPANY
(Exact name of registrant as specified in its charter)
 
 Commission file number 1-442
 
 
Delaware
 
91-0425694
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
 
 
100 N. Riverside, Chicago, IL
 
60606-1596
(Address of principal executive offices)
 
(Zip Code)
 
 
 
 
 
 
(312) 544-2000
 
 
(Registrant's telephone number, including area code)
 
 
 
 
 
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
c
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
c
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
c
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
c
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 





Item 2.02 Results of Operations and Financial Condition
On July 27, 2016, The Boeing Company issued a press release reporting its financial results for the second quarter of 2016. A copy of the Company’s press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.


Item 9.01 Financial Statements and Exhibits
(a) Not applicable
(b) Not applicable
(c) Not applicable
(d) Exhibits
 
99.1
 
Press Release issued by The Boeing Company dated July 27, 2016, reporting Boeing's financial results for the second quarter of 2016, furnished herewith.




2


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
 
           



 
 
THE BOEING COMPANY
 
 
 
 
(Registrant)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
/s/ Robert E. Verbeck
 
 
 
 
Robert E. Verbeck
 
 
 
 
 
 
 
 
 
Senior Vice President, Finance and Corporate Controller
 
 
 
 
July 27, 2016
 
 

          


3


EXHIBIT INDEX


Exhibit
Number
 
Description
99.1
 
Press Release issued by The Boeing Company dated July 27, 2016, reporting Boeing's financial results for the second quarter of 2016, furnished herewith.



4


 
 
Exhibit 99.1
 
News Release
  
 
 
 
 
  
Boeing Corporate Offices
100 North Riverside Plaza
Chicago, IL 60606-1596
www.boeing.com
Boeing Reports Second-Quarter Results
▪
Revenue increased to $24.8 billion on strong commercial deliveries and services growth
▪
Loss of $0.37 per share (GAAP) and core (non-GAAP)* loss of $0.44 per share reflect $3.23 per share impact related to previously announced 787 R&D reclassification and 747 & Tanker charges
▪
Strong operating cash flow of $3.2 billion; repurchased 15 million shares for $2.0 billion
▪
Backlog remains robust at $472 billion with nearly 5,700 commercial airplane orders
▪
Cash and marketable securities of $9.3 billion provide strong liquidity
▪
Reaffirmed cash & revenue guidance; EPS reflects reclassification, charges, solid performance & tax

Table 1. Summary Financial Results
 
Second Quarter
 
 
 
First Half
 
 
(Dollars in Millions, except per share data)
 
2016
 
2015
 
Change
 
2016
 
2015
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 

$24,755

 

$24,543

 
1%

 

$47,387

 

$46,692

 
1%

 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP
 
 
 
 
 
 
 
 
 
 
 
 
Earnings/(Loss) From Operations
 

($419
)
 

$1,683

 
(125)%

 

$1,369

 

$3,702

 
(63)%

Operating Margin
 
(1.7
)%
 
6.9
%
 
(8.6) Pts

 
2.9
%
 
7.9
%
 
(5.0) Pts

Net Earnings/(Loss)
 

($234
)
 

$1,110

 
(121)%

 

$985

 

$2,446

 
(60)%

Earnings/(Loss) Per Share
 

($0.37
)
 

$1.59

 
(123)%

 

$1.51

 

$3.46

 
(56)%

Operating Cash Flow
 

$3,234

 

$3,297

 
(2)%

 

$4,465

 

$3,385

 
32%

Non-GAAP*
 
 
 
 
 
 
 
 
 
 
 
 
Core Operating Earnings/(Loss)
 

($488
)
 

$1,713

 
(128)%

 

$1,206

 

$3,845

 
(69)%

Core Operating Margin
 
(2.0
)%
 
7.0
%
 
(9.0) Pts

 
2.5
%
 
8.2
%
 
(5.7) Pts

Core Earnings/(Loss) Per Share
 

($0.44
)
 

$1.62

 
(127)%

 

$1.35

 

$3.59

 
(62)%

* Non-GAAP measures. Complete definitions of Boeing’s non-GAAP measures are on page 7, “Non-GAAP Measures Disclosures.”     

CHICAGO, July 27, 2016 – The Boeing Company [NYSE: BA] reported second-quarter revenue of $24.8 billion on strong commercial deliveries and services growth (Table 1). GAAP loss per share of $0.37 and core loss per share (non-GAAP)* of $0.44 reflect the previously announced 787 cost reclassification ($1.33 per share) and charges on the 747 program ($1.28 per share) and the KC-46 Tanker program ($0.62 per share), partially offset by solid execution and higher volume.
"The underlying operating performance of the company remains solid with our commercial and defense teams again delivering strong revenues and operating cash flow. Actions taken during the quarter that impacted our

1



earnings were the right, proactive steps to reduce risk and strengthen our position for the future,” said Chairman, President and Chief Executive Officer Dennis Muilenburg. “Our strong cash generation also supported our ongoing commitment to invest in product innovation and in our people, and return substantial cash to shareholders through stock repurchases and dividends.”
“As we look forward to the second half of the year, we anticipate continued strong operating performance across our production and services programs on generally healthy demand for our broad portfolio of market-leading offerings. Our commercial airplane development programs remain on track and we have successfully completed the flight testing required for customer approval of key KC-46 production milestones.”
“Overall our teams remain intensely focused on improving productivity and quality, building out our large and diverse backlog, investing in future growth, and delivering increasing value to all of our stakeholders.”
GAAP earnings per share guidance for 2016 has been adjusted to between $6.40 and $6.60 from $8.45 and $8.65 and core earnings per share (non-GAAP)* guidance has been adjusted to between $6.10 and $6.30 from $8.15 and $8.35 to reflect the impact of the 787 R&D reclassification and the 747 and Tanker charges, solid performance and tax benefits.
Table 2. Cash Flow
 
Second Quarter
 
First Half
(Millions)
 
2016
 
2015
 
2016
 
2015
Operating Cash Flow
 

$3,234

 

$3,297

 

$4,465

 

$3,385

Less Additions to Property, Plant & Equipment
 

($671
)
 

($692
)
 

($1,419
)
 

($1,266
)
Free Cash Flow*
 

$2,563

 

$2,605

 

$3,046

 

$2,119

* Non-GAAP measures. Complete definitions of Boeing’s non-GAAP measures are on page 7, “Non-GAAP Measures Disclosures.”     
Operating cash flow in the quarter was $3.2 billion, largely reflecting commercial airplane production rates and solid operating performance (Table 2). During the quarter, the company repurchased 15.3 million shares for $2.0 billion, leaving $8.5 billion remaining under the current repurchase authorization which is expected to be completed over approximately the next two years. The company also paid $691 million in dividends in the quarter, reflecting an approximately 20 percent increase in dividends per share compared to the same period of the prior year.

2



Table 3. Cash, Marketable Securities and Debt Balances
 
Quarter-End
(Billions)
 
Q2 16
 
Q1 16
Cash
 

$8.6

 

$7.9

Marketable Securities1
 

$0.7

 

$0.5

Total
 

$9.3

 

$8.4

Debt Balances:
 
 
 
 
The Boeing Company, net of intercompany loans to BCC
 

$8.7

 

$7.6

Boeing Capital, including intercompany loans
 

$2.3

 

$2.4

Total Consolidated Debt
 

$11.0

 

$10.0

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

Cash and investments in marketable securities totaled $9.3 billion, up from $8.4 billion at the beginning of the quarter. Debt was $11.0 billion, up from the beginning of the quarter, primarily due to the issuance of new debt (Table 3).
Total company backlog at quarter-end was $472 billion, down from $480 billion at the beginning of the quarter, and included net orders for the quarter of $17 billion.
Segment Results
Commercial Airplanes
Table 4. Commercial Airplanes
 
Second Quarter
 
 
 
First Half
 
 
(Dollars in Millions)
 
2016
 
2015
 
Change
 
2016
 
2015
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial Airplanes Deliveries
 
199

 
197

 
1%

 
375

 
381

 
(2)%

 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 

$17,456



$16,877

 
3%

 

$31,855

 

$32,258

 
(1)%

Earnings/(Loss) from Operations
 

($973
)


$1,206

 
(181)%

 

$60

 

$2,823

 
(98)%

Operating Margin
 
(5.6
)%

7.1
%
 
(12.7) Pts

 
0.2
%
 
8.8
%
 
(8.6) Pts

Commercial Airplanes second-quarter revenue increased 3 percent to $17.5 billion on higher volume and mix (Table 4). Second-quarter operating margin was negative 5.6 percent, reflecting previously announced R&D reclassification of $1,235 million on the 787 program, a pre-tax charge of $1,188 million on the 747 program, and a pre-tax charge of $354 million on the KC-46 Tanker program. The results also reflect higher planned R&D and solid execution. Second-quarter operating margin excluding the reclassification and charges (non-GAAP)* was 10.3%.
During the quarter, the 787 program reached a 12 per month delivery rate and the company opened the new 777X Composite Wing Center in Everett. The 737 program rolled out the first two 737 MAX production airplanes and has captured over 3,200 orders for the 737 MAX since launch, including an order for 100 737 MAX 200 airplanes from Vietjet during the quarter. The 737 MAX development program is progressing smoothly and entry into service is being accelerated.
Commercial Airplanes booked 152 net orders during the quarter. Backlog remains strong with nearly 5,700 airplanes valued at $417 billion.

3



Defense, Space & Security
Table 5. Defense, Space & Security
 
Second Quarter
 
 
 
First Half
 
 
(Dollars in Millions)
 
2016
 
2015
 
Change
 
2016
 
2015
 
Change
Revenues1
 
 
 
 
 
 
 
 
 
 
 
 
Boeing Military Aircraft
 

$2,979

 

$3,474

 
(14)%

 

$6,638

 

$6,200

 
7%

Network & Space Systems
 

$1,810

 

$1,938

 
(7)%

 

$3,545

 

$3,670

 
(3)%

Global Services & Support
 

$2,385

 

$2,132

 
12%

 

$4,947

 

$4,383

 
13%

Total BDS Revenues
 

$7,174

 

$7,544

 
(5)%

 

$15,130

 

$14,253

 
6%

Earnings from Operations1
 
 
 
 
 
 
 
 
 
 
 
 
Boeing Military Aircraft
 

$175

 

$121

 
45%

 

$509

 

$380

 
34%

Network & Space Systems
 

$153

 

$151

 
1%

 

$301

 

$318

 
(5)%

Global Services & Support
 

$265

 

$274

 
(3)%

 

$605

 

$591

 
2%

Total BDS Earnings from Operations
 

$593

 

$546

 
9%

 

$1,415

 

$1,289

 
10%

Operating Margin
 
8.3
%
 
7.2
%
 
1.1 Pts

 
9.4
%
 
9.0
%
 
0.4 Pts

1 During the first quarter of 2016, certain programs were realigned between Boeing Military Aircraft and Global Services & Support.
Defense, Space & Security’s second-quarter revenue was $7.2 billion. Second quarter operating margin was 8.3 percent, reflecting the previously announced $219 million pre-tax charge recorded at Boeing Military Aircraft on the KC-46 Tanker program (Table 5).
Boeing Military Aircraft (BMA) second-quarter revenue was $3.0 billion, reflecting lower planned C-17 and Chinook deliveries. Operating margin was 5.9 percent, reflecting the KC-46 Tanker charge. During the quarter, BMA was awarded contracts for 24 Apache and 12 Chinook helicopters.
Network & Space Systems (N&SS) second-quarter revenue was $1.8 billion. Operating margin increased to 8.5 percent, reflecting performance and timing on United Launch Alliance launches.
Global Services & Support (GS&S) second-quarter revenue increased to $2.4 billion, reflecting higher volume in Aircraft Modernization & Sustainment. Operating margin was 11.1 percent largely reflecting contract mix. 
Backlog at Defense, Space & Security was $55 billion, of which 37 percent represents orders from international customers.

4



Additional Financial Information
Table 6. Additional Financial Information
 
Second Quarter
 
First Half
(Dollars in Millions)
 
2016
 
2015
 
2016
 
2015
Revenues
 
 
 
 
 
 
 
 
Boeing Capital
 

$84

 

$115

 

$148

 

$201

Unallocated items, eliminations and other
 

$41

 

$7

 

$254

 

($20
)
Earnings from Operations
 
 
 
 
 
 
 
 
Boeing Capital
 

$18

 

$11

 

$23

 

$31

Unallocated pension/postretirement
 

$69

 

($30
)
 

$163

 

($143
)
Other unallocated items and eliminations
 

($126
)
 

($50
)
 

($292
)
 

($298
)
Other income, net
 

$13

 

$15

 

$39

 

$3

Interest and debt expense
 

($73
)
 

($75
)
 

($146
)
 

($136
)
Effective tax rate
 
51.1
%
 
31.6
%
 
21.9
%
 
31.5
%
At quarter-end, Boeing Capital's net portfolio balance was $3 billion, down from the beginning of the quarter. Total pension expense for the second quarter was $463 million, down from $523 million in the same period of the prior year. Other unallocated items and eliminations decreased from the same period in the prior year primarily due to higher deferred compensation expense and elimination of intercompany profit. The effective tax rate for the second quarter was increased from the same period in the prior year primarily due to lower pre-tax income. During the quarter, the company adopted a new accounting standard for share-based compensation payments which resulted in a $54 million tax benefit ($0.08 per share).


5



Outlook
The company’s 2016 updated financial and delivery guidance (Table 7) reflects the impact of the 787 R&D reclassification and the 747 and Tanker charges, solid performance and tax benefits.
Table 7. 2016 Financial Outlook
Current
 
Prior
(Dollars in Billions, except per share data)
Guidance
 
Guidance
 
 
 
 
The Boeing Company
 
 
 
Revenue
$93.0 - 95.0
 
$93.0 - 95.0
GAAP Earnings Per Share
$6.40 - 6.60
 
$8.45 - 8.65
Core Earnings Per Share*
$6.10 - 6.30
 
$8.15 - 8.35
Operating Cash Flow
~$10.0
 
~$10.0
 
 
 
 
Commercial Airplanes
 
 
 
Deliveries
740 - 745
 
740 - 745
Revenue
$64.0 - 65.0
 
$64.0 - 65.0
Operating Margin
4.5% - 5.0
 
~9.0%
 
 
 
 
Defense, Space & Security
 
 
 
Revenue
 
 
 
Boeing Military Aircraft
~$12.3
 
~$12.3
Network & Space Systems
~$7.3
 
~$7.3
Global Services & Support
~$9.4
 
~$9.4
 
 
 
 
Total BDS Revenue
$28.5 - 29.5
 
$28.5 - 29.5
 
 
 
 
Operating Margin
 
 
 
Boeing Military Aircraft
~9.5%
 
~10.0%
Network & Space Systems
~9.0%
 
~9.0%
Global Services & Support
~12.0%
 
~11.5%
 
 
 
 
Total BDS Operating Margin
>10.0%
 
>10.0%
 
 
 
 
Boeing Capital
 
 
 
Portfolio Size
Stable
 
Stable
Revenue
~$0.3
 
~$0.3
Pre-Tax Earnings
~$0.05
 
~$0.05
 
 
 
 
Research & Development
~ $4.8
 
~ $3.6
Capital Expenditures
~ $2.8
 
~ $2.8
Pension Expense 1
~ $2.1
 
~ $2.1
Effective Tax Rate
~ 23.0%
 
~ 30.0%
1 Approximately ($0.1) 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 7, “Non-GAAP Measures Disclosures.”


6



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/(Loss), Core Operating Margin and Core Earnings/(Loss) Per Share
Core operating earnings/(loss) is defined as GAAP earnings/(loss) from operations excluding unallocated pension and post-retirement expense. Core operating margin is defined as core operating earnings/(loss) expressed as a percentage of revenue. Core earnings/(loss) per share is defined as GAAP diluted earnings/(loss) 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. Pension costs, comprising service and prior service costs computed in accordance with Generally Accepted Accounting Principles in the United States of America (GAAP) are allocated to Commercial Airplanes. Pension costs allocated to BDS segments 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.
Commercial Airplanes Operating Margin Excluding the Reclassification and Charges
Commercial Airplanes GAAP operating margin for the three months ended June 30, 2016 includes research and development expense of $1,235 million related to the reclassification of costs associated with two 787 flight test aircraft from program inventory, a reach-forward loss on the 747 program of $1,188 million, and a reach-forward loss recorded at Commercial Airplanes on the KC-46 Tanker program of $354 million. Management uses Commercial Airplanes operating margin excluding the reclassification and charges for the purpose of evaluating underlying business performance for the three months ended June 30, 2016. Management believes that this measure also helps investors assess overall trends in our operational performance and provide additional context for year over year financial results. 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.


7




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 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:
 
 
 
Investor Relations:
  
Troy Lahr or Ben Hackman (312) 544-2140
Communications:
  
Bernard Choi (312) 544-2002


8



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)
2016

 
2015

 
2016

 
2015

Sales of products

$42,069

 

$41,408

 

$22,184

 

$21,923

Sales of services
5,318

 
5,284

 
2,571

 
2,620

Total revenues
47,387

 
46,692

 
24,755

 
24,543


 
 
 
 
 
 
 
Cost of products
(37,210
)
 
(35,627
)
 
(20,265
)
 
(19,247
)
Cost of services
(4,180
)
 
(4,186
)
 
(2,044
)
 
(2,086
)
Boeing Capital interest expense
(32
)
 
(33
)
 
(16
)
 
(17
)
Total costs and expenses
(41,422
)
 
(39,846
)
 
(22,325
)
 
(21,350
)

5,965

 
6,846

 
2,430

 
3,193

Income from operating investments, net
151

 
129

 
97

 
50

General and administrative expense
(1,694
)
 
(1,705
)
 
(806
)
 
(760
)
Research and development expense, net
(3,044
)
 
(1,569
)
 
(2,127
)
 
(800
)
(Loss)/gain on dispositions, net
(9
)
 
1

 
(13
)
 


Earnings/(loss) from operations
1,369

 
3,702

 
(419
)
 
1,683

Other income, net
39

 
3

 
13

 
15

Interest and debt expense
(146
)
 
(136
)
 
(73
)
 
(75
)
Earnings/(loss) before income taxes
1,262

 
3,569

 
(479
)
 
1,623

Income tax (expense)/benefit
(277
)
 
(1,123
)
 
245

 
(513
)
Net earnings/(loss)

$985

 

$2,446

 

($234
)
 

$1,110

 
 
 
 
 
 
 
 
Basic earnings/(loss) per share

$1.52

 

$3.50

 

($0.37
)
 

$1.61

 
 
 
 
 
 
 
 
Diluted earnings/(loss) per share

$1.51

 

$3.46

 

($0.37
)
 

$1.59

 
 
 
 
 
 
 
 
Cash dividends paid per share

$2.18

 

$1.82

 

$1.09

 

$0.91

 
 
 
 
 
 
 
 
Weighted average diluted shares (millions)
654.9

 
706.6

 
636.3

**
698.9


** As a result of incurring a net loss for the three months ended June 30, 2016, potential common shares of 6.7 million were excluded from diluted earnings per share.



9




The Boeing Company and Subsidiaries
Consolidated Statements of Financial Position
(Unaudited) 
(Dollars in millions, except per share data)
June 30
2016

 
December 31
2015

Assets
 
 
 
Cash and cash equivalents

$8,605

 

$11,302

Short-term and other investments
660

 
750

Accounts receivable, net
9,809

 
8,713

Current portion of customer financing, net
251

 
212

Inventories, net of advances and progress billings
44,182

 
47,257

Total current assets
63,507

 
68,234

Customer financing, net
2,909

 
3,358

Property, plant and equipment, net of accumulated depreciation of $16,641 and $16,286
12,533

 
12,076

Goodwill
5,128

 
5,126

Acquired intangible assets, net
2,544

 
2,657

Deferred income taxes
267

 
265

Investments
1,312

 
1,284

Other assets, net of accumulated amortization of $451 and $451
1,409

 
1,408

Total assets

$89,609

 

$94,408

Liabilities and equity

 

Accounts payable

$11,748

 

$10,800

Accrued liabilities
13,534

 
14,014

Advances and billings in excess of related costs
23,409

 
24,364

Short-term debt and current portion of long-term debt
1,168

 
1,234

Total current liabilities
49,859

 
50,412

Deferred income taxes
2,422

 
2,392

Accrued retiree health care
6,586

 
6,616

Accrued pension plan liability, net
18,200

 
17,783

Other long-term liabilities
2,048

 
2,078

Long-term debt
9,847

 
8,730

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
4,778

 
4,834

Treasury stock, at cost - 386,402,793 and 345,637,354 shares
(34,821
)
 
(29,568
)
Retained earnings
38,362

 
38,756

Accumulated other comprehensive loss
(12,795
)
 
(12,748
)
Total shareholders’ equity
585

 
6,335

Noncontrolling interests
62

 
62

Total equity
647

 
6,397

Total liabilities and equity

$89,609

 

$94,408




10



The Boeing Company and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
 
Six months ended June 30
(Dollars in millions)
2016

 
2015

Cash flows – operating activities:
 
 
 
Net earnings/(loss)

$985

 

$2,446

Adjustments to reconcile net earnings to net cash provided by operating activities:
 
 
 
Non-cash items – 
 
 
 
Share-based plans expense
97

 
94

Depreciation and amortization
890

 
912

Investment/asset impairment charges, net
50

 
74

Customer financing valuation benefit
(4
)
 
(5
)
Gain/(loss) on dispositions, net
9

 
(1
)
Other charges and credits, net
141

 
140

Excess tax benefits from share-based payment arrangements


 
(124
)
Changes in assets and liabilities – 
 
 
 
Accounts receivable
(503
)
 
(313
)
Inventories, net of advances and progress billings
3,004

 
(2,395
)
Accounts payable
1,221

 
888

Accrued liabilities
(269
)
 
(177
)
Advances and billings in excess of related costs
(954
)
 
195

Income taxes receivable, payable and deferred
(494
)
 
482

Other long-term liabilities
(103
)
 
(17
)
Pension and other postretirement plans
181

 
1,244

Customer financing, net
275

 
19

Other
(61
)
 
(77
)
Net cash provided by operating activities
4,465

 
3,385

Cash flows – investing activities:
 
 
 
Property, plant and equipment additions
(1,419
)
 
(1,266
)
Property, plant and equipment reductions
13

 
20

Acquisitions, net of cash acquired


 
(23
)
Contributions to investments
(657
)
 
(1,205
)
Proceeds from investments
705

 
2,040

Other
8

 
22

Net cash used by investing activities
(1,350
)
 
(412
)
Cash flows – financing activities:
 
 
 
New borrowings
1,323

 
761

Debt repayments
(267
)
 
(846
)
Stock options exercised
147

 
276

Excess tax benefits from share-based payment arrangements


 
124

Employee taxes on certain share-based payment arrangements
(79
)
 
(90
)
Common shares repurchased
(5,501
)
 
(4,501
)
Dividends paid
(1,408
)
 
(1,264
)
Other
(24
)
 


Net cash used by financing activities
(5,809
)
 
(5,540
)
Effect of exchange rate changes on cash and cash equivalents
(3
)
 
(9
)
Net decrease in cash and cash equivalents
(2,697
)
 
(2,576
)
Cash and cash equivalents at beginning of year
11,302

 
11,733

Cash and cash equivalents at end of period

$8,605

 

$9,157




11



The Boeing Company and Subsidiaries
Summary of Business Segment Data
(Unaudited)
 
Six months ended June 30
 
Three months ended June 30
(Dollars in millions)
2016

 
2015

 
2016

 
2015

Revenues:
 
 
 
 
 
 
 
Commercial Airplanes

$31,855

 

$32,258

 

$17,456

 

$16,877

Defense, Space & Security:
 
 
 
 
 
 
 
Boeing Military Aircraft
6,638

 
6,200

 
2,979

 
3,474

Network & Space Systems
3,545

 
3,670

 
1,810

 
1,938

Global Services & Support
4,947

 
4,383

 
2,385

 
2,132

Total Defense, Space & Security
15,130

 
14,253

 
7,174

 
7,544

Boeing Capital
148

 
201

 
84

 
115

Unallocated items, eliminations and other
254

 
(20
)
 
41

 
7

Total revenues

$47,387

 

$46,692

 

$24,755

 

$24,543

Earnings/(loss) from operations:
 
 
 
 
 
 
 
Commercial Airplanes

$60

 

$2,823

 

($973
)
 

$1,206

Defense, Space & Security:
 
 
 
 
 
 
 
Boeing Military Aircraft
509

 
380

 
175

 
121

Network & Space Systems
301

 
318

 
153

 
151

Global Services & Support
605

 
591

 
265

 
274

Total Defense, Space & Security
1,415

 
1,289

 
593

 
546

Boeing Capital
23

 
31

 
18

 
11

Segment operating profit/(loss)
1,498

 
4,143

 
(362
)
 
1,763

Unallocated items, eliminations and other
(129
)
 
(441
)
 
(57
)
 
(80
)
Earnings/(loss) from operations
1,369

 
3,702

 
(419
)
 
1,683

Other income, net
39

 
3

 
13

 
15

Interest and debt expense
(146
)
 
(136
)
 
(73
)
 
(75
)
Earnings/(loss) before income taxes
1,262

 
3,569

 
(479
)
 
1,623

Income tax (expense)/benefit
(277
)
 
(1,123
)
 
245

 
(513
)
Net earnings/(loss)

$985

 

$2,446

 

($234
)
 

$1,110

 
 
 
 
 
 
 
 
Research and development expense, net:
 
 
 
 
 
 
 
Commercial Airplanes

$2,548

 

$1,097

 

$1,877

 

$554

Defense, Space & Security
521

 
474

 
263

 
250

Other
(25
)
 
(2
)
 
(13
)
 
(4
)
Total research and development expense, net

$3,044

 

$1,569

 

$2,127

 

$800

 
 
 
 
 
 
 
 
Unallocated items, eliminations and other:
 
 
 
 
 
 
 
Share-based plans

($41
)
 

($37
)
 

($18
)
 

($16
)
Deferred compensation
(5
)
 
(48
)
 
(21
)
 
10

Amortization of previously capitalized interest
(48
)
 
(49
)
 
(18
)
 
(20
)
Eliminations and other unallocated items
(198
)
 
(164
)
 
(69
)
 
(24
)
Sub-total (included in core operating earnings)
(292
)
 
(298
)
 
(126
)
 
(50
)
Pension
79

 
(209
)
 
34

 
(57
)
Postretirement
84

 
66

 
35

 
27

Total unallocated items, eliminations and other

($129
)
 

($441
)
 

($57
)
 

($80
)

12



The Boeing Company and Subsidiaries
Operating and Financial Data
(Unaudited)
 
 
Deliveries
 
Six months ended June 30
 
Three months ended June 30
 
Commercial Airplanes
 
2016

 
2015

 
2016

 
2015

 
737
 
248

 
249

 
127

 
128

 
747
 
3

 
9

 
2

 
5

 
767
 
5

 
9

 
4

 
4

 
777
 
51

 
50

 
28

 
26

 
787
 
68

 
64

 
38

 
34

 
Total
 
375

 
381

 
199

 
197

 
Note: Deliveries under operating lease are identified by parentheses.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Defense, Space & Security
 
 
 
 
 
 
 
 
 
Boeing Military Aircraft
 
 
 
 
 
 
 
 
 
AH-64 Apache (New)
 
15

 
12

 
8

 
6

 
AH-64 Apache (Remanufactured)
 
18

 
23

 
7

 
13

 
C-17 Globemaster III
 
4

 
3

 
1

 
2

 
CH-47 Chinook (New)
 
10

 
21

 
7

 
15

 
CH-47 Chinook (Renewed)
 
16

 
5

 
7

 
1

 
F-15 Models
 
7

 
5

 
3

 
4

 
F/A-18 Models
 
14

 
20

 
6

 
9

 
P-8 Models
 
9

 
6

 
5

 
4

 
 
 
 
 
 
 
 
 
 
 
Global Services & Support
 
 
 
 
 
 
 
 
 
AEW&C
 


 


 


 


 
C-40A
 


 
1

 


 


 
 
 
 
 
 
 
 
 
 
 
Network & Space Systems
 
 
 
 
 
 
 
 
 
Commercial and Civil Satellites
 
1

 
1

 

 
1

 
Military Satellites
 
1

 
1

 
1

 
1

 
 
 
 
 
 
 
 
 
 
 
Contractual backlog (Dollars in billions)
 
June 30
2016

 
December 31
2015

Commercial Airplanes
 

$416.6

 

$431.4

Defense, Space & Security:
 
 
 
 
Boeing Military Aircraft
 
22.6

 
19.9

Network & Space Systems
 
6.9

 
7.4

Global Services & Support
 
16.9

 
17.9

Total Defense, Space & Security
 
46.4

 
45.2

Total contractual backlog
 

$463.0

 

$476.6

Unobligated backlog
 

$9.2

 

$12.7

Total backlog
 

$472.2

 

$489.3

Workforce
 
158,100

 
161,400



13



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, core earnings per share, and Commercial Airplanes operating margin excluding the reclassification and charges with the most directly comparable GAAP financial measures, earnings from operations, operating margin, diluted earnings per share and Commercial Airplanes operating margin. See page 7 of this release for additional information on the use of these non-GAAP financial measures.
(Dollars in millions, except per share data)
Second Quarter

First Half

Guidance
  
2016

2015

2016

2015

2016
Revenues

$24,755



$24,543



$47,387



$46,692


 
 
 
 
 
 
 
 
 

 
GAAP Earnings/(Loss) From Operations

($419
)


$1,683



$1,369



$3,702


 
Increase/(Decrease) in GAAP Earnings From Operations
(125
%)




(63
%)




 
GAAP Operating Margin
(1.7
%)

6.9
%

2.9
%

7.9
%

 
 
 
 
 
 
 
 
 

 
Unallocated Pension (Income)/Expense

($34
)


$57



($79
)


$209


 
Unallocated Other Postretirement Benefit Income

($35
)


($27
)


($84
)


($66
)

 
Unallocated Pension and Other Postretirement Benefit (Income)/Expense

($69
)


$30



($163
)


$143


~($300)
Core Operating Earnings/(Loss) (non-GAAP)

($488
)


$1,713



$1,206



$3,845


 
Increase/(Decrease) in Core Operating Earnings (non-GAAP)
(128
%)




(69
%)




 
Core Operating Margin (non-GAAP)
(2.0
%)

7.0
%

2.5
%

8.2
%

 
 












 
GAAP Diluted Earnings/(Loss) Per Share

($0.37
)


$1.59



$1.51



$3.46


$6.40 - $6.60
Unallocated Pension (Income)/Expense

($0.05
)


$0.09



($0.12
)


$0.29


 
Unallocated Postretirement Benefit (Income)/Expense

($0.06
)


($0.04
)


($0.13
)


($0.09
)

($0.30)
Provision for deferred income taxes on adjustments (1)

$0.04



($0.02
)


$0.09



($0.07
)

 
Core Earnings/(Loss) Per Share (non-GAAP)

($0.44
)


$1.62



$1.35



$3.59


$6.10 - $6.30
 
 
 
 
 
 
 
 
 
 
Weighted Average Diluted Shares (millions)
636.3

**
698.9


654.9


706.6


645 - 650
Increase/(Decrease) in GAAP Earnings Per Share
(123
%)

 

(56
%)

 
 
 
Increase/(Decrease) in Core Earnings Per Share (non-GAAP)
(127
%)

 

(62
%)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
Commercial Airplanes Revenues

$17,456

 
 
 
 
 
 
 
 
GAAP Commercial Airplanes Earnings/(Loss) from Operations

($973
)
 
 
 
 
 
 
 
 
GAAP Commercial Airplanes Operating margin
(5.6
%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost reclassification of two 787 flight test aircraft

$1,235

 
 
 
 
 
 
 
 
Reach-forward loss on 747 program

$1,188

 
 
 
 
 
 
 
 
Reach-forward loss at Commercial Airplanes on KC-46 Tanker program

$354

 
 
 
 
 
 
 
 
Commercial Airlines Earnings from Operations excluding the reclassification and charges (non-GAAP)

$1,804

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial Airplanes operating margin excluding the reclassification and charges (non-GAAP)
10.3%

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) The income tax impact is calculated using the tax rate in effect for the non-GAAP adjustments.
** As a result of incurring a net loss for the three months ended June 30, 2016, potential common shares of 6.7 million were excluded from diluted earnings per share.


14

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

SEC Filings