Form 8-K BOEING CO For: Jul 24

July 24, 2019 7:40 AM


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 24, 2019
 
THE BOEING COMPANY
(Exact name of registrant as specified in its charter)
 
1-442
 
 
 Commission file number
 
 
Delaware
 
91-0425694
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
 
 
100 N. Riverside Plaza,
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:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, $5.00 Par Value
 
BA
 
New York Stock Exchange





Item 2.02 Results of Operations and Financial Condition
On July 24, 2019, The Boeing Company issued a press release reporting its financial results for the second quarter of 2019. 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
(d) Exhibits
 
Exhibit No.
 
Description
 
 
 
 
 
99.1
 





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 24, 2019
 
 



          

3
Exhibit 99.1
 


pressreleaseheadera02.jpg
Boeing Reports Second-Quarter Results
Continue to engage global regulators and customers on safe return to service of the 737 MAX
Recorded charge and increased costs related to the 737 MAX, as previously announced
Revenue of $15.8 billion reflecting 737 MAX impacts and higher defense and services volume
Loss of ($5.21) per share (GAAP) and core (non-GAAP)* loss of ($5.82) per share
Operating cash flow of ($0.6) billion; paid $1.2 billion of dividends
Total backlog of $474 billion, including more than 5,500 commercial airplanes
Cash and marketable securities of $9.6 billion provide strong liquidity
Previously issued 2019 guidance does not reflect 737 MAX impacts; new guidance to be issued at a future date
Table 1. Summary Financial Results
 
Second Quarter
 
 
 
First Half
 
 
(Dollars in Millions, except per share data)
 
2019
 
2018
 
Change
 
2019
 
2018
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 

$15,751

 

$24,258

 
(35)%
 

$38,668

 

$47,640

 
(19)%
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP
 
 
 
 
 
 
 
 
 
 
 
 
(Loss)/Earnings From Operations
 

($3,380
)
 

$2,710

 
NM
 

($1,030
)
 

$5,585

 
NM
Operating Margin
 
(21.5
)%
 
11.2
%
 
NM
 
(2.7
)%
 
11.7
%
 
NM
Net (Loss)/Earnings
 

($2,942
)
 

$2,196

 
NM
 

($793
)
 

$4,673

 
NM
(Loss)/Earnings Per Share
 

($5.21
)
 

$3.73

 
NM
 

($1.40
)
 

$7.88

 
NM
Operating Cash Flow
 

($590
)
 

$4,680

 
NM
 

$2,198

 

$7,816

 
NM
Non-GAAP*
 
 
 
 
 
 
 
 
 
 
 
 
Core Operating (Loss)/Earnings
 

($3,745
)
 

$2,393

 
NM
 

($1,759
)
 

$4,903

 
NM
Core Operating Margin
 
(23.8
)%
 
9.9
%
 
NM
 
(4.5
)%
 
10.3
%
 
NM
Core (Loss)/Earnings Per Share
 

($5.82
)
 

$3.33

 
NM
 

($2.60
)
 

$6.97

 
NM
*Non-GAAP measure; complete definitions of Boeing’s non-GAAP measures are on page 6, “Non-GAAP Measures Disclosures."    
CHICAGO, July 24, 2019 – The Boeing Company [NYSE: BA] reported second-quarter revenue of $15.8 billion, GAAP loss per share of ($5.21) and core loss per share (non-GAAP)* of ($5.82), reflecting the previously announced 737 MAX charge (which reduced revenue by $5.6 billion and earnings by $8.74 per share) as well as lower 737 deliveries partially offset by higher defense and services volume (Table 1). Boeing recorded operating cash flow of ($0.6) billion and paid $1.2 billion of dividends.
The previously issued 2019 financial guidance does not reflect 737 MAX impacts. Due to the uncertainty of the timing and conditions surrounding return to service of the 737 MAX fleet, new guidance will be issued at a future date. Boeing is working very closely with the FAA on the process they have laid out to certify the 737 MAX software update and safely return the MAX to service. Disciplined development and testing is underway and we will submit the final software package to the FAA once we have satisfied all of their certification requirements. Regulatory authorities will determine the process for certifying the MAX software and training updates as well as the timing for lifting the grounding order.


1


“This is a defining moment for Boeing and we remain focused on our enduring values of safety, quality, and integrity in all that we do, as we work to safely return the 737 MAX to service,” said Boeing Chairman, President and Chief Executive Officer Dennis Muilenburg. “During these challenging times, teams across our enterprise continue to perform at a high level while delivering on commitments and capturing new opportunities driven by strong, long-term fundamentals.”          
Table 2. Cash Flow
 
Second Quarter
 
First Half
(Millions)
 
2019
 
2018
 
2019
 
2018
Operating Cash Flow
 

($590
)
 

$4,680

 

$2,198

 

$7,816

Less Additions to Property, Plant & Equipment
 

($421
)
 

($376
)
 

($922
)
 

($770
)
Free Cash Flow*
 

($1,011
)
 

$4,304

 

$1,276

 

$7,046

*Non-GAAP measure; complete definitions of Boeing’s non-GAAP measures are on page 6, “Non-GAAP Measures Disclosures."    
Operating cash flow was ($0.6) billion in the quarter, primarily reflecting lower 737 deliveries and production rate as well as timing of receipts and expenditures (Table 2). During the quarter, the company paid $1.2 billion of dividends, reflecting a 20 percent increase in dividends per share compared to the same period of the prior year.
Table 3. Cash, Marketable Securities and Debt Balances
 
Quarter-End
(Billions)
 
Q2 19
 
Q1 19
Cash
 

$9.2

 

$6.8

Marketable Securities1
 

$0.4



$0.9

Total
 

$9.6

 

$7.7

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

$17.3

 

$12.6

Boeing Capital, including intercompany loans
 

$1.9

 

$2.1

Total Consolidated Debt
 

$19.2

 

$14.7

1 Marketable securities consists primarily of time deposits due within one year classified as "short-term investments."
Cash and investments in marketable securities totaled $9.6 billion, compared to $7.7 billion at the beginning of the quarter (Table 3). Debt was $19.2 billion, up from $14.7 billion at the beginning of the quarter primarily due to the issuance of new debt.
Total company backlog at quarter-end remained healthy at $474 billion and included net orders of $9 billion.

2


Segment Results
Commercial Airplanes
Table 4. Commercial Airplanes
 
Second Quarter
 
 
 
First Half
 
 
(Dollars in Millions)
 
2019
 
2018
 
Change
 
2019
 
2018
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial Airplanes Deliveries
 
90

 
194

 
(54)%
 
239

 
378

 
(37)%
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 

$4,722


13,952

 
(66)%
 

$16,544

 

$26,897

 
(38)%
(Loss)/Earnings from Operations
 

($4,946
)


$1,785

 
NM
 

($3,773
)
 

$3,197

 
NM
Operating Margin
 
(104.7
)%

12.8
%
 
NM
 
(22.8
)%
 
11.9
%
 
NM
Commercial Airplanes second-quarter revenue was $4.7 billion reflecting the previously announced 737 MAX charge and lower 737 deliveries partially offset by favorable mix (Table 4). Second-quarter operating margin was (104.7) percent reflecting the previously announced 737 MAX charge and lower 737 deliveries partially offset by a higher margin on the 787 program.
During the quarter, Commercial Airplanes delivered 90 airplanes, including 42 787s, and captured orders for two 777 freighters for DHL and six 767 freighters for FedEx. Highlights from the Paris Air Show included a letter of intent from IAG for 200 737 MAX airplanes as well as several wide body commitments. The 777X program is progressing well through pre-flight testing. While the company is still targeting late 2020 for first delivery of the 777X, there is significant risk to this schedule given engine challenges, which are delaying first flight until early 2020. 
Commercial Airplanes backlog remains healthy with more than 5,500 airplanes valued at $390 billion.

3



Defense, Space & Security
Table 5. Defense, Space & Security
 
Second Quarter
 
 
 
First Half
 
 
(Dollars in Millions)
 
2019
 
2018
 
Change
 
2019
 
2018
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 

$6,612

 

$6,100

 
8%
 

$13,223

 

$12,581

 
5%
Earnings from Operations
 

$975

 

$376

 
159%
 

$1,822

 

$1,133

 
61%
Operating Margin
 
14.7
%
 
6.2
%
 
8.5 Pts
 
13.8
%
 
9.0
%
 
4.8 Pts
Defense, Space & Security second-quarter revenue increased to $6.6 billion primarily driven by higher volume across derivative aircraft, satellites, and weapons (Table 5). Second-quarter operating margin increased to 14.7 percent primarily due to a gain on sale of property and lower cost growth on the KC-46 Tanker program compared to the second quarter of 2018.
During the quarter, Defense, Space & Security received contracts for MH-47G Block II Chinook for the U.S. Army Special Operations, F/A-18 service life modification for the U.S. Navy, Joint Direct Attack Munition for the U.S. Air Force, and Wideband Global Satellite Communication for the U.S. Air Force. Significant milestones achieved during the quarter included completion of the first T-X Trainer flight test on contract with the U.S. Air Force and the final parachute test for the Commercial Crew spacecraft.
Backlog at Defense, Space & Security was $64 billion, of which 31 percent represents orders from customers outside the U.S.
Global Services
Table 6. Global Services
 
Second Quarter
 
 
 
First Half
 
 
(Dollars in Millions)
 
2019
 
2018
 
Change
 
2019
 
2018
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 

$4,543

 

$4,097

 
11%
 

$9,162

 

$8,047

 
14%
Earnings from Operations
 

$687

 

$604

 
14%
 

$1,340

 

$1,251

 
7%
Operating Margin
 
15.1
%
 
14.7
%
 
0.4 Pts
 
14.6
%
 
15.5
%
 
(0.9) Pts
Global Services second-quarter revenue increased to $4.5 billion, primarily driven by the acquisition of Boeing Distribution Services, Inc. (formerly KLX) and higher international government services volume (Table 6). Second-quarter operating margin was relatively stable at 15.1 percent.
During the quarter, Global Services was awarded Performance Based Logistics contracts for AH-64 Apache for the U.S. Army and KC-767A Tanker for the Italian Air Force. At the Paris Air Show, Global Services signed commitments with ASL Aviation Holdings and GECAS for up to 45 737-800 converted freighters and announced digital solution agreements with Delta Air Lines and JetBlue Airways.

4



Additional Financial Information
Table 7. Additional Financial Information
 
Second Quarter
 
First Half
(Dollars in Millions)
 
2019
 
2018
 
2019
 
2018
Revenues
 
 
 
 
 
 
 
 
Boeing Capital
 

$75

 

$72

 

$141

 

$137

Unallocated items, eliminations and other
 

($201
)
 

$37

 

($402
)
 

($22
)
Earnings from Operations
 
 
 
 
 
 
 
 
Boeing Capital
 

$37

 

$24

 

$57

 

$44

FAS/CAS service cost adjustment
 

$365

 

$317

 

$729

 

$682

Other unallocated items and eliminations
 

($498
)
 

($396
)
 

($1,205
)
 

($722
)
Other income, net
 

$107

 

($15
)
 

$213

 

$51

Interest and debt expense
 

($154
)
 

($109
)
 

($277
)
 

($211
)
Effective tax rate
 
14.2
%
 
15.1
%
 
27.5
%
 
13.9
%
At quarter-end, Boeing Capital's net portfolio balance was $2.3 billion. Revenue in other unallocated items and eliminations decreased primarily due to reserves related to cost accounting litigation. The change in earnings from other unallocated items and eliminations is primarily due to increased enterprise research and development investment. The effective tax rate for the second quarter decreased from the same period in the prior year primarily due to lower pre-tax earnings in the current year.
Outlook
The previously issued 2019 financial guidance does not reflect 737 MAX impacts. Due to the uncertainty of the timing and conditions surrounding return to service of the 737 MAX fleet, new guidance will be issued at a future date.


5



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 (Loss)/Earnings, Core Operating Margin and Core (Loss)/Earnings Per Share
Core operating (loss)/earnings is defined as GAAP (loss)/earnings from operations excluding the FAS/CAS service cost adjustment. The FAS/CAS service cost adjustment represents the difference between the FAS pension and postretirement service costs calculated under GAAP and costs allocated to the business segments. Core operating margin is defined as core operating (loss)/earnings expressed as a percentage of revenue. Core (loss)/earnings per share is defined as GAAP diluted (loss)/earnings per share excluding the net (loss)/earnings per share impact of the FAS/CAS service cost adjustment and Non-operating pension and postretirement expenses. Non-operating pension and postretirement expenses represent the components of net periodic benefit costs other than service cost. Pension costs, comprising service and prior service costs computed in accordance with GAAP are allocated to Commercial Airplanes and BGS businesses supporting commercial customers. Pension costs allocated to BDS and BGS businesses supporting government customers are computed in accordance with U.S. Government Cost Accounting Standards (CAS), which employ different actuarial assumptions and accounting conventions than GAAP. CAS costs are allocable to government contracts. Other postretirement benefit costs are allocated to all business segments based on CAS, which is generally based on benefits paid. Management uses core operating (loss)/earnings, core operating margin and core (loss)/earnings per share for purposes of evaluating and forecasting underlying business performance. Management believes these core (loss)/earnings measures provide investors additional insights into operational performance as they exclude non-service pension and post-retirement costs, which primarily represent costs driven by market factors and costs not allocable to government contracts. A reconciliation between the GAAP and non-GAAP measures is provided on page 13-14.
Free Cash Flow
Free cash flow is defined as GAAP operating cash flow without capital expenditures for property, plant and equipment additions. Management believes free cash flow provides investors with an important perspective on the cash available for shareholders, debt repayment, and acquisitions after making the capital investments required to support ongoing business operations and long term value creation. Free cash flow does not represent the residual cash flow available for discretionary expenditures as it excludes certain mandatory expenditures such as repayment of maturing debt. Management uses free cash flow as a measure to assess both business performance and overall liquidity. Table 2 provides a reconciliation of free cash flow to GAAP operating cash flow.



6




Caution Concerning Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “may,” “should,” “expects,” “intends,” “projects,” “plans,” “believes,” “estimates,” “targets,” “anticipates,” and similar expressions generally identify these forward-looking statements. Examples of forward-looking statements include statements relating to our future financial condition and operating results, as well as any other statement that does not directly relate to any historical or current fact. Forward-looking statements are based on expectations and assumptions that we believe to be reasonable when made, but that may not prove to be accurate. These statements are not guarantees and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict. Many factors could cause actual results to differ materially and adversely from these forward-looking statements. Among these factors are risks related to: (1) the timing and conditions surrounding the return to service of the 737 MAX fleet; (2) general conditions in the economy and our industry, including those due to regulatory changes; (3) our reliance on our commercial airline customers; (4) the overall health of our aircraft production system, planned commercial aircraft production rate changes, our commercial development and derivative aircraft programs, and our aircraft being subject to stringent performance and reliability standards; (5) changing budget and appropriation levels and acquisition priorities of the U.S. government; (6) our dependence on U.S. government contracts; (7) our reliance on fixed-price contracts; (8) our reliance on cost-type contracts; (9) uncertainties concerning contracts that include in-orbit incentive payments; (10) our dependence on our subcontractors and suppliers, as well as the availability of raw materials; (11) changes in accounting estimates; (12) changes in the competitive landscape in our markets; (13) our non-U.S. operations, including sales to non-U.S. customers; (14) threats to the security of our or our customers’ information; (15) potential adverse developments in new or pending litigation and/or government investigations; (16) customer and aircraft concentration in our customer financing portfolio; (17) changes in our ability to obtain debt on commercially reasonable terms and at competitive rates; (18) realizing the anticipated benefits of mergers, acquisitions, joint ventures/strategic alliances or divestitures; (19) the adequacy of our insurance coverage to cover significant risk exposures; (20) potential business disruptions, including those related to physical security threats, information technology or cyber-attacks, epidemics, sanctions or natural disasters; (21) work stoppages or other labor disruptions; (22) substantial pension and other postretirement benefit obligations; and (23) potential environmental liabilities.
Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Any forward-looking statement speaks only as of the date on which it is made, and we assume no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.

# # #
Contact:
 
 
 
Investor Relations:
  
Maurita Sutedja or Keely Moos (312) 544-2140
Communications:
  
Chaz Bickers (312) 544-2002


7



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)
2019

 
2018

 
2019

 
2018

Sales of products

$33,319

 

$42,385

 

$13,094

 

$21,565

Sales of services
5,349

 
5,255

 
2,657

 
2,693

Total revenues
38,668

 
47,640

 
15,751

 
24,258


 
 
 
 
 
 
 
Cost of products
(31,910
)
 
(34,252
)
 
(15,672
)
 
(17,436
)
Cost of services
(4,511
)
 
(4,075
)
 
(2,122
)
 
(2,083
)
Boeing Capital interest expense
(34
)
 
(33
)
 
(16
)
 
(17
)
Total costs and expenses
(36,455
)
 
(38,360
)
 
(17,810
)
 
(19,536
)

2,213

 
9,280

 
(2,059
)
 
4,722

Income/(loss) from operating investments, net
5

 
80

 
(15
)
 
6

General and administrative expense
(1,856
)
 
(2,191
)
 
(672
)
 
(1,194
)
Research and development expense, net
(1,692
)
 
(1,591
)
 
(826
)
 
(827
)
Gain on dispositions, net
300

 
7

 
192

 
3

(Loss)/earnings from operations
(1,030
)
 
5,585

 
(3,380
)
 
2,710

Other income/(loss), net
213

 
51

 
107

 
(15
)
Interest and debt expense
(277
)
 
(211
)
 
(154
)
 
(109
)
(Loss)/earnings before income taxes
(1,094
)
 
5,425

 
(3,427
)
 
2,586

Income tax benefit/(expense)
301

 
(752
)
 
485

 
(390
)
Net (loss)/earnings

($793
)
 

$4,673

 

($2,942
)
 

$2,196

 
 
 
 
 
 
 
 
Basic (loss)/earnings per share

($1.40
)
 

$7.97

 

($5.21
)
 

$3.77

 
 
 
 
 
 
 
 
Diluted (loss)/earnings per share

($1.40
)
 

$7.88

 

($5.21
)
 

$3.73

 
 
 
 
 
 
 
 
Weighted average diluted shares (millions)
566.6

 
592.9

 
565.3

 
588.7






8



The Boeing Company and Subsidiaries
Consolidated Statements of Financial Position
(Unaudited) 
(Dollars in millions, except per share data)
June 30
2019

 
December 31
2018

Assets
 
 
 
Cash and cash equivalents

$9,167

 

$7,637

Short-term and other investments
439

 
927

Accounts receivable, net
3,291

 
3,879

Unbilled receivables, net
10,247

 
10,025

Current portion of customer financing, net
171

 
460

Inventories
68,492

 
62,567

Other current assets
3,304

 
2,335

Total current assets
95,111

 
87,830

Customer financing, net
2,139

 
2,418

Property, plant and equipment, net of accumulated depreciation of $18,855 and $18,568
12,601

 
12,645

Goodwill
8,051

 
7,840

Acquired intangible assets, net
3,761

 
3,429

Deferred income taxes
357

 
284

Investments
1,142

 
1,087

Other assets, net of accumulated amortization of $523 and $503
3,099

 
1,826

Total assets

$126,261

 

$117,359

Liabilities and equity

 

Accounts payable

$15,267

 

$12,916

Accrued liabilities
20,042

 
14,808

Advances and progress billings
52,523

 
50,676

Short-term debt and current portion of long-term debt
4,357

 
3,190

Total current liabilities
92,189

 
81,590

Deferred income taxes


 
1,736

Accrued retiree health care
4,486

 
4,584

Accrued pension plan liability, net
14,831

 
15,323

Other long-term liabilities
4,839

 
3,059

Long-term debt
14,859

 
10,657

Shareholders’ equity:
 
 
 
Common stock, par value $5.00 – 1,200,000,000 shares authorized; 1,012,261,159 shares issued
5,061

 
5,061

Additional paid-in capital
6,638

 
6,768

Treasury stock, at cost - 449,558,553 and 444,619,970 shares
(54,932
)
 
(52,348
)
Retained earnings
52,819

 
55,941

Accumulated other comprehensive loss
(14,908
)
 
(15,083
)
Total shareholders’ equity
(5,322
)
 
339

Noncontrolling interests
379

 
71

Total equity
(4,943
)
 
410

Total liabilities and equity

$126,261

 

$117,359




9



The Boeing Company and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
 
Six months ended June 30
(Dollars in millions)
2019

 
2018

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

($793
)
 

$4,673

Adjustments to reconcile net earnings to net cash provided by operating activities:
 
 
 
Non-cash items – 
 
 
 
Share-based plans expense
104

 
98

Depreciation and amortization
1,067

 
1,008

Investment/asset impairment charges, net
70

 
44

Customer financing valuation adjustments
249

 
(2
)
Gain on dispositions, net
(300
)
 
(7
)
Other charges and credits, net
145

 
112

Changes in assets and liabilities – 
 
 
 
Accounts receivable
588

 
62

Unbilled receivables
(222
)
 
(1,675
)
Advances and progress billings
1,842

 
2,931

Inventories
(5,233
)
 
408

Other current assets
(887
)
 
2

Accounts payable
2,002

 
682

Accrued liabilities
4,959

 
(922
)
Income taxes receivable, payable and deferred
(921
)
 
269

Other long-term liabilities
(509
)
 
(65
)
Pension and other postretirement plans
(390
)
 
(57
)
Customer financing, net
347

 
(97
)
Other
80

 
352

Net cash provided by operating activities
2,198

 
7,816

Cash flows – investing activities:
 
 
 
Property, plant and equipment additions
(922
)
 
(770
)
Property, plant and equipment reductions
331

 
41

Acquisitions, net of cash acquired
(492
)
 


Contributions to investments
(496
)
 
(1,537
)
Proceeds from investments
758

 
1,028

Purchase of distribution rights
(20
)
 
(56
)
Other
(12
)
 
(1
)
Net cash used by investing activities
(853
)
 
(1,295
)
Cash flows – financing activities:
 
 
 
New borrowings
11,670

 
3,648

Debt repayments
(6,422
)
 
(2,708
)
Contributions from noncontrolling interests
7

 
20

Stock options exercised
47

 
61

Employee taxes on certain share-based payment arrangements
(238
)
 
(236
)
Common shares repurchased
(2,651
)
 
(5,965
)
Dividends paid
(2,317
)
 
(1,997
)
Net cash provided/(used) by financing activities
96

 
(7,177
)
Effect of exchange rate changes on cash and cash equivalents, including restricted
(2
)
 
(36
)
Net increase/(decrease) in cash & cash equivalents, including restricted
1,439

 
(692
)
Cash & cash equivalents, including restricted, at beginning of year
7,813

 
8,887

Cash & cash equivalents, including restricted, at end of period
9,252

 
8,195

Less restricted cash & cash equivalents, included in Investments
85

 
74

Cash and cash equivalents at end of period

$9,167

 

$8,121





10



The Boeing Company and Subsidiaries
Summary of Business Segment Data
(Unaudited)
Effective at the beginning of 2019, all revenues and costs associated with military derivative aircraft production are reported in the Defense, Space & Security segment. Revenues and costs associated with military derivative aircraft production were previously reported in the Commercial Airplanes and Defense, Space & Security segments. Business segment data for 2018 reflects the realignment for military derivative aircraft as well as the realignment of certain programs from Defense, Space & Security to Global Services.
 
Six months ended June 30
 
Three months ended June 30
(Dollars in millions)
2019

 
2018

 
2019

 
2018

Revenues:
 
 
 
 
 
 
 
Commercial Airplanes

$16,544

 

$26,897

 

$4,722

 

$13,952

Defense, Space & Security
13,223

 
12,581

 
6,612

 
6,100

Global Services
9,162

 
8,047

 
4,543

 
4,097

Boeing Capital
141

 
137

 
75

 
72

Unallocated items, eliminations and other
(402
)
 
(22
)
 
(201
)
 
37

Total revenues

$38,668

 

$47,640

 

$15,751

 

$24,258

(Loss)/earnings from operations:
 
 
 
 
 
 
 
Commercial Airplanes

($3,773
)
 

$3,197

 

($4,946
)
 

$1,785

Defense, Space & Security
1,822

 
1,133

 
975

 
376

Global Services
1,340

 
1,251

 
687

 
604

Boeing Capital
57

 
44

 
37

 
24

Segment operating (loss)/profit
(554
)
 
5,625

 
(3,247
)
 
2,789

Unallocated items, eliminations and other
(1,205
)
 
(722
)
 
(498
)
 
(396
)
FAS/CAS service cost adjustment
729

 
682

 
365

 
317

(Loss)/earnings from operations
(1,030
)
 
5,585

 
(3,380
)
 
2,710

Other income/(loss), net
213

 
51

 
107

 
(15
)
Interest and debt expense
(277
)
 
(211
)
 
(154
)
 
(109
)
(Loss)/earnings before income taxes
(1,094
)
 
5,425

 
(3,427
)
 
2,586

Income tax benefit/(expense)
301

 
(752
)
 
485

 
(390
)
Net (loss)/earnings

($793
)
 

$4,673

 

($2,942
)
 

$2,196

 
 
 
 
 
 
 
 
Research and development expense, net:
 
 
 
 
 
 
 
Commercial Airplanes

$1,062

 

$1,099

 

$498

 

$550

Defense, Space & Security
384

 
402

 
196

 
219

Global Services
73

 
71

 
33

 
37

Other
173

 
19

 
99

 
21

Total research and development expense, net

$1,692

 

$1,591

 

$826

 

$827

 
 
 
 
 
 
 
 
Unallocated items, eliminations and other:
 
 
 
 
 
 
 
Share-based plans

($36
)
 

($36
)
 

($22
)
 

($18
)
Deferred compensation
(129
)
 
(56
)
 
(27
)
 
(27
)
Amortization of previously capitalized interest
(45
)
 
(48
)
 
(21
)
 
(23
)
Customer financing impairment
(250
)
 


 


 

Research and development expense, net
(173
)
 
(19
)
 
(99
)
 
(21
)
Eliminations and other unallocated items
(572
)

(563
)

(329
)

(307
)
Sub-total (included in core operating earnings)
(1,205
)
 
(722
)
 
(498
)
 
(396
)
Pension FAS/CAS service cost adjustment
549

 
520

 
275

 
237

Postretirement FAS/CAS service cost adjustment
180

 
162

 
90

 
80

FAS/CAS service cost adjustment
729


682



$365



$317

Total

($476
)
 

($40
)


($133
)


($79
)

11



The Boeing Company and Subsidiaries
Operating and Financial Data
(Unaudited)
  
Deliveries
 
Six months ended June 30
 
Three months ended June 30
 
Commercial Airplanes
 
2019

 
2018

 
2019

 
2018

 
737
 
113


269


24


137


747
 
4


3


2


1


767
 
22


9


10


5


777
 
22

(1)
25


12


13


787
 
78


72


42


38


Total
 
239

 
378

 
90

 
194

 
Note: Aircraft accounted for as revenues by BCA and as operating leases in consolidation identified by parentheses
 
 
 
 
 
 
 
 
 
 
Defense, Space & Security
 
 
 
 
 
 
 
 
 
AH-64 Apache (New)
 
10

 

 
4

 

 
AH-64 Apache (Remanufactured)
 
35

 
6

 
13

 

 
CH-47 Chinook (New)
 
7

 
9

 

 
5

 
CH-47 Chinook (Renewed)
 
9

 
8

 
5

 
4

 
F-15 Models
 
5

 
5

 
1

 
3

 
F/A-18 Models
 
10

 
5

 
3

 

 
KC-46 Tanker
 
12

 

 
5

 

 
P-8 Models
 
8

 
8

 
5

 
4

 
Commercial and Civil Satellites
 
1

 

 
1

 

 
Military Satellites
 

 

 

 

 
Total backlog (Dollars in millions)
 
June 30
2019

 
December 31
2018

Commercial Airplanes
 

$390,405

 

$408,140

Defense, Space & Security
 
63,872

 
61,277

Global Services
 
19,974

 
21,064

Total backlog
 

$474,251

 

$490,481

 
 
 
 
 
Contractual backlog
 

$448,816

 

$462,070

Unobligated backlog
 
25,435

 
28,411

Total backlog
 

$474,251

 

$490,481


12



The Boeing Company and Subsidiaries
Reconciliation of Non-GAAP Measures
(Unaudited)
The tables provided below reconcile the non-GAAP financial measures core operating (loss)/earnings, core operating margin, and core (loss)/earnings per share with the most directly comparable GAAP financial measures, (loss)/earnings from operations, operating margin, and diluted (loss)/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)

Second Quarter 2019

Second Quarter 2018


$ millions

Per Share


$ millions

Per Share

Revenues

15,751




24,258



(Loss)/earnings from operations (GAAP)

(3,380
)



2,710



Operating margin (GAAP)

(21.5
)%



11.2
%













FAS/CAS service cost adjustment:










Pension FAS/CAS service cost adjustment

(275
)



(237
)


Postretirement FAS/CAS service cost adjustment

(90
)



(80
)


FAS/CAS service cost adjustment

(365
)



(317
)


Core operating (loss)/earnings (non-GAAP)


($3,745
)




$2,393



Core operating margin (non-GAAP)

(23.8
)%



9.9
%













Diluted (loss)/earnings per share (GAAP)




($5.21
)




$3.73

Pension FAS/CAS service cost adjustment


($275
)
(0.49
)


($237
)
(0.40
)
Postretirement FAS/CAS service cost adjustment

(90
)
(0.16
)

(80
)
(0.14
)
Non-operating pension expense

(94
)
(0.17
)

(6
)
(0.01
)
Non-operating postretirement expense

26

0.05


24

0.04

Provision for deferred income taxes on adjustments 1

91

0.16


63

0.11

Subtotal of adjustments


($342
)

($0.61
)


($236
)

($0.40
)
Core (loss)/earnings per share (non-GAAP)




($5.82
)




$3.33












Weighted average diluted shares (in millions)



565.3




588.7

1 The income tax impact is calculated using the U.S. corporate statutory tax rate.


























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, 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)
 
First Half 2019
 
First Half 2018
 
 
$ millions

Per Share

 
$ millions

Per Share

Revenues
 
38,668

 
 
47,640

 
(Loss)/earnings from operations (GAAP)
 
(1,030
)
 
 
5,585

 
Operating margin (GAAP)
 
(2.7
)%
 
 
11.7
%
 
 
 
 
 
 
 
 
FAS/CAS service cost adjustment:
 
 
 
 
 
 
Pension FAS/CAS service cost adjustment
 
(549
)
 
 
(520
)
 
Postretirement FAS/CAS service cost adjustment
 
(180
)
 
 
(162
)
 
FAS/CAS service cost adjustment
 
(729
)
 
 
(682
)
 
Core operating (loss)/earnings (non-GAAP)
 

($1,759
)
 
 

$4,903

 
Core operating margin (non-GAAP)
 
(4.5
)%
 
 
10.3
%
 
 
 
 
 
 
 
 
Diluted earnings per share (GAAP)
 
 

($1.40
)
 
 

$7.88

Pension FAS/CAS service cost adjustment
 

($549
)
(0.97
)
 

($520
)
(0.88
)
Postretirement FAS/CAS service cost adjustment
 
(180
)
(0.32
)
 
(162
)
(0.27
)
Non-operating pension expense
 
(187
)
(0.32
)
 
(48
)
(0.08
)
Non-operating postretirement expense
 
53

0.09

 
48

0.08

Provision for deferred income taxes on adjustments 1
 
181

0.32

 
143

0.24

Subtotal of adjustments
 

($682
)

($1.20
)
 

($539
)

($0.91
)
Core (loss)/earnings per share (non-GAAP)
 
 

($2.60
)
 
 

$6.97

 
 
 
 
 
 
 
Weighted average diluted shares (in millions)
 
 
566.6

 
 
592.9

1 The income tax impact is calculated using the U.S. corporate statutory tax rate.











14

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