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 23, 2014
 
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 23, 2014, The Boeing Company issued a press release reporting its financial results for the second quarter of 2014. 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 23, 2014, reporting Boeing's financial results for the second quarter of 2014, 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
 
 
 
 
 
 
 
 
 
Vice President of Finance & Corporate Controller
 
 
 
 
July 23, 2014
 
 

          


3


EXHIBIT INDEX


Exhibit
Number
 
Description
99.1
 
Press release issued by The Boeing Company dated July 23, 2014, reporting Boeing’s financial results for the second quarter of 2014, 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 and Raises 2014 EPS Guidance
▪
Revenue of $22 billion reflects higher commercial deliveries
▪
Core EPS (non-GAAP)* increased 45 percent to $2.42; GAAP EPS of $2.24
▪
Solid operating cash flow of $1.8 billion; strong liquidity of $11.3 billion in cash & marketable securities
▪
Backlog remains strong at $440 billion with over 5,200 commercial airplane orders
▪
Repurchased 11.4 million shares for $1.5 billion
▪
2014 core EPS guidance increased $0.75 to between $7.90 and $8.10

Table 1. Summary Financial Results
 
Second Quarter
 
 
 
First Half
 
 
(Dollars in Millions, except per share data)
 
2014
 
2013
 
Change
 
2014
 
2013
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 

$22,045

 

$21,815

 
1%

 

$42,510

 

$40,708

 
4%

 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP*
 
 
 
 
 
 
 
 
 
 
 
 
Core Operating Earnings
 

$1,991

 

$2,028

 
(2)%

 

$4,086

 

$3,895

 
5%

Core Operating Margin
 
9.0
%
 
9.3
%
 
(0.3) Pts

 
9.6
%
 
9.6
%
 
0.0 Pts

Core Earnings Per Share
 

$2.42

 

$1.67

 
45%

 

$4.16

 

$3.40

 
22%

Operating Cash Flow Before Pension Contributions
 

$1,809

 

$3,480

 
(48)%

 

$2,921

 

$4,004

 
(27)%

GAAP
 
 
 
 
 
 
 
 
 
 
 
 
Earnings From Operations
 

$1,787

 

$1,716

 
4%

 

$3,329

 

$3,244

 
3%

Operating Margin
 
8.1
%
 
7.9
%
 
0.2 Pts

 
7.8
%
 
8.0
%
 
(0.2) Pts

Net Earnings
 

$1,653

 

$1,088

 
52%

 

$2,618

 

$2,194

 
19%

Earnings Per Share
 

$2.24

 

$1.41

 
59%

 

$3.50

 

$2.85

 
23%

Operating Cash Flow
 

$1,809

 

$3,467

 
(48)%

 

$2,921

 

$3,991

 
(27)%

* Non-GAAP measures (core operating earnings, core operating margin and core earnings per share) exclude certain components of pension and post retirement benefit expense that management believes are not reflective of underlying business performance. Complete definitions of Boeing’s non-GAAP measures are on page 7, “Non-GAAP Measures Disclosures.”     

CHICAGO, July 23, 2014 – The Boeing Company [NYSE: BA] reported second-quarter core earnings per share (non-GAAP) of $2.42, reflecting strong performance and favorable tax items (Table 1). Second-quarter 2014 results included a $272 million after-tax charge ($0.37 per share) on the KC-46A Tanker program reflecting the cost of additional engineering and systems installation work required to complete the Engineering and Manufacturing Development contract. Favorable tax items include the previously announced tax benefit of $116 million for the 2007-2008 tax settlement, as well as an additional tax benefit of $408 million in the second quarter.         
Core earnings per share guidance for 2014 increased to between $7.90 and $8.10, from $7.15 to $7.35, reflecting the $408 million tax benefits, strong operating performance and the KC-46A Tanker charge. GAAP

1



earnings per share guidance for 2014 increased to between $6.85 and $7.05.     
“Strong operating performance across our production programs and services businesses drove revenue and earnings-per-share growth and healthy operating cash flow, which supported $1.5 billion in additional share repurchases in the quarter,” said Boeing Chairman and Chief Executive Officer Jim McNerney. “We delivered our first 787-9 and our 8,000th 737, successfully completed a key missile defense intercept test, and delivered our 100th EA-18G Growler to the U.S. Navy.”
“While challenges resolving engineering and systems installation issues on our tanker test aircraft are resulting in higher spending to maintain schedule, the issues are well understood and we remain on path to begin flight testing fully provisioned tankers the first part of next year,” McNerney said.
     “With 783 new commercial airplane orders to date this year and significant contracts in the quarter for military aircraft and satellites, our backlog remains large and diverse.  Overall, our strong first-half financial performance, sustained focus on growth and productivity, and positive market outlook support our increased earnings guidance for the year,” he said.
Table 2. Cash Flow
 
Second Quarter
 
First Half
(Millions)
 
2014
 
2013
 
2014
 
2013
Operating Cash Flow Before Pension Contributions*
 

$1,809

 

$3,480

 

$2,921

 

$4,004

        Pension Contributions
 


 

($13
)
 


 

($13
)
Operating Cash Flow
 

$1,809

 

$3,467

 

$2,921

 

$3,991

Less Additions to Property, Plant & Equipment
 

($449
)
 

($455
)
 

($946
)
 

($976
)
Free Cash Flow*
 

$1,360

 

$3,012

 

$1,975

 

$3,015

Operating cash flow in the quarter was $1.8 billion, reflecting commercial airplane production rates, strong operating performance and timing of receipts and expenditures (Table 2). During the quarter, the company repurchased 11.4 million shares for $1.5 billion, leaving $6.8 billion remaining under the current repurchase authorization expected to be completed over approximately the next two years. The company also paid $0.5 billion in dividends in the quarter, reflecting an approximately 50 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 14
 
Q1 14
Cash
 

$7.5

 

$6.9

Marketable Securities1
 

$3.8

 

$5.3

Total
 

$11.3

 

$12.2

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

$6.4

 

$6.3

Boeing Capital, including intercompany loans
 

$2.5

 

$2.6

Total Consolidated Debt
 

$8.9

 

$8.9

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

Cash and investments in marketable securities totaled $11.3 billion at quarter-end (Table 3), down from $12.2 billion at the beginning of the quarter, primarily due to the share repurchases. Debt was $8.9 billion, unchanged from the beginning of the quarter.
Total company backlog of $440 billion was unchanged from the beginning of the quarter, and included net orders for the quarter of $23 billion.

2




Segment Results
Commercial Airplanes
Table 4. Commercial Airplanes
 
Second Quarter
 
 
 
First Half
 
 
(Dollars in Millions)
 
2014
 
2013
 
Change
 
2014
 
2013
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial Airplanes Deliveries
 
181

 
169

 
7%
 
342

 
306

 
12%

 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 

$14,304

 

$13,624

 
5%
 

$27,041

 

$24,314

 
11%

Earnings from Operations
 

$1,550

 

$1,453

 
7%
 

$3,052

 

$2,672

 
14 %

Operating Margin
 
10.8
%
 
10.7
%
 
0.1 Pts
 
11.3
%
 
11.0
%
 
0.3
 Pts
Commercial Airplanes second-quarter revenue increased 5 percent to $14.3 billion on higher deliveries. Second-quarter operating margin was 10.8 percent, reflecting the delivery volume and strong performance offset by the $238 million pre-tax charge on the KC-46A Tanker program (Table 4). During the quarter, Commercial Airplanes delivered the first 787-9 Dreamliner and the 787 program received 330-minute ETOPS certification. In July, Emirates Airline and Qatar Airways finalized orders totaling 200 777X airplanes and Monarch Airlines announced a commitment to purchase 30 737 MAX airplanes.
Commercial Airplanes booked 264 net orders during the quarter. Backlog remains strong with over 5,200 airplanes valued at a record $377 billion.
Defense, Space & Security
Table 5. Defense, Space & Security
Second Quarter
 
 
 
First Half
 
 
(Dollars in Millions)
2014
 
2013
 
Change
 
2014
 
2013
 
Change
Revenues1
 
 
 
 
 
 
 
 
 
 
 
Boeing Military Aircraft

$3,523

 

$3,641

 
(3)%

 

$6,981

 

$7,621

 
(8)%

Network & Space Systems

$1,920

 

$2,049

 
(6)%

 

$3,796

 

$4,009

 
(5)%

Global Services & Support

$2,304

 

$2,496

 
(8)%

 

$4,603

 

$4,666

 
(1)%

Total BDS Revenues

$7,747

 

$8,186

 
(5)%

 

$15,380

 

$16,296

 
(6)%

Earnings from Operations1
 
 
 
 
 
 
 
 
 
 
 
Boeing Military Aircraft

$165

 

$386

 
(57)%

 

$497

 

$813

 
(39)%

Network & Space Systems

$150

 

$137

 
9%

 

$318

 

$293

 
9%

Global Services & Support

$267

 

$253

 
6%

 

$545

 

$502

 
9%

Total BDS Earnings from Operations

$582

 

$776

 
(25)%

 

$1,360

 

$1,608

 
(15)%

Operating Margin
7.5
%
 
9.5
%
 
(2.0) Pts

 
8.8
%
 
9.9
%
 
(1.1) Pts

1 During the first quarter of 2014, certain programs were realigned between Boeing Military Aircraft and Global Services & Support.
Defense, Space & Security’s second-quarter revenue was $7.7 billion. Operating margin was 7.5 percent, reflecting the $187 million pre-tax charge recorded at BMA on the KC-46A Tanker program partially offset by strong operating performance (Table 5).
Boeing Military Aircraft (BMA) second-quarter revenue was $3.5 billion, reflecting fewer C-17 and P-8 deliveries partially offset by higher F-15 deliveries. Operating margin of 4.7 percent was impacted by the charge on the KC-46A Tanker program. During the quarter, BMA was awarded a contract for 44 E/A-18 and F/A-18 aircraft from the U.S. Navy.

3



Network & Space Systems (N&SS) second-quarter revenue was $1.9 billion, reflecting lower commercial satellites volume, and operating margin increased to 7.8 percent.  During the quarter, N&SS completed a successful Missile Defense System intercept in flight test.
Global Services & Support (GS&S) second-quarter revenue was $2.3 billion, reflecting lower volume in maintenance, modifications and upgrades.  Operating margin increased to 11.6 percent reflecting strong performance.  During the quarter, GS&S was awarded a 5 year contract to provide support for Australia’s Airborne Early Warning & Control (AEW&C) aircraft. 
Backlog at Defense, Space & Security was $63 billion, of which 36 percent represents orders with international customers.
Additional Financial Information
Table 6. Additional Financial Information
 
Second Quarter
 
First Half
(Dollars in Millions)
 
2014
 
2013
 
2014
 
2013
Revenues
 
 
 
 
 
 
 
 
Boeing Capital
 

$90

 

$104

 

$172

 

$209

Other segment
 

$22

 

$27

 

$42

 

$54

Unallocated items and eliminations
 

($118
)
 

($126
)
 

($125
)
 

($165
)
Earnings from Operations
 
 
 
 
 
 
 
 
Boeing Capital
 

$33

 

$19

 

$77

 

$63

Other segment income/(expense)
 

($48
)
 

($43
)
 

($110
)
 

($101
)
Unallocated items and eliminations excluding unallocated pension/postretirement expense
 

($126
)
 

($177
)
 

($293
)
 

($347
)
Unallocated pension/postretirement expense
 

($204
)
 

($312
)
 

($757
)
 

($651
)
Other income, net
 

$11

 

$13

 

$20

 

$22

Interest and debt expense
 

($81
)
 

($96
)
 

($173
)
 

($195
)
Effective tax rate
 
3.7
%
 
33.4
%
 
17.6
%
 
28.6
%
At quarter-end, Boeing Capital's net portfolio balance was $3.4 billion down from $3.5 billion at the beginning of the quarter.
Unallocated items and eliminations totaled $126 million at quarter end, down from $177 million in the same period of the prior year, primarily due to lower deferred compensation expense. Total pension expense for the second quarter was $693 million, down from $753 million in the same period of the prior year. The company's effective income tax rate was 3.7 percent at quarter end, down from 33.4 percent in the same period of the prior year. The second quarter 2014 effective income tax rate included a $265 million benefit for a tax basis adjustment, $143 million benefit for a 2009-2010 tax settlement and the previously announced benefit of $116 million for the 2007-2008 tax settlement.


4



Outlook
The company’s 2014 financial guidance (Table 7) reflects continued strong performance in both businesses.
Table 7. Financial Outlook
 
(Dollars in Billions, except per share data)
2014
 
 
The Boeing Company
 
Revenue
$87.5 - 90.5
Core Earnings Per Share*
$7.90 - 8.10
GAAP Earnings Per Share
$6.85 - 7.05
       Operating Cash Flow Before Pension Contributions*
~ $7
Operating Cash Flow 1
~ $6.25
 
 
Commercial Airplanes
 
Deliveries 2
715 - 725
 Revenue
$57.5 - 59.5
 Operating Margin
> 10%
 
 
Defense, Space & Security (revised for business realignment)
 
Revenue
 
Boeing Military Aircraft
~ $14.2
Network & Space Systems
~ $7.7
Global Services & Support
~ $8.6
 
 
Total BDS Revenue
$30 - 31
 
 
Operating Margin
 
Boeing Military Aircraft
~ 9.0%
Network & Space Systems
~ 8.5%
Global Services & Support
~ 11.0%
 
 
Total BDS Operating Margin
~ 9.5%
 
 
Boeing Capital
 
Portfolio Size
Lower
Revenue
~ $0.3
Pre-Tax Earnings
~ $0.05
 
 
Research & Development
~ $3.2
Capital Expenditures
~ $2.5
Pension Expense 3
~ $3.2
Effective Tax Rate 4
~ 23%
1    After discretionary cash pension contributions of $0.75 billion and assuming new aircraft financings under $0.5 billion
2    Assumes approximately 110 787 deliveries
3 Approximately $1.3 billion is expected to be recorded in unallocated items and eliminations
4 Assumes the extension of the research and development tax credit
*    Non-GAAP measures. Complete definitions of Boeing’s non-GAAP measures are on page 7, “Non-GAAP Measures Disclosures.”
    Boeing's core earnings per share guidance for 2014 increased to between $7.90 and $8.10, from $7.15 to $7.35, reflecting the $408 million tax benefits, strong operating performance and the KC-46A Tanker charge. GAAP earnings per share guidance for 2014 increased to between $6.85 and $7.05.

5



Commercial Airplanes operating margin guidance increased to greater than 10 percent on strong operating performance.
Defense, Space & Security operating margin guidance is unchanged at approximately 9.5 percent. Boeing Military Aircraft operating margin guidance is lowered to approximately 9 percent. Global Services & Support operating margin guidance increased to approximately 11 percent reflecting strong performance.
Boeing’s effective tax rate is now expected to be approximately 23 percent in 2014, down from approximately 29 percent, to reflect the additional tax benefits recorded in the second quarter and continues to assume the extension of the research and development tax credit.
  

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, Core Operating Margin and Core Earnings Per Share
Core operating earnings is defined as GAAP earnings from operations excluding unallocated pension and post-retirement expense. Core operating margin is defined as core operating earnings expressed as a percentage of revenue. Core earnings per share is defined as GAAP diluted earnings per share excluding the net earnings per share impact of unallocated pension and post-retirement expense. Unallocated pension and post-retirement expense represents the portion of pension and other post-retirement costs that are not recognized by business segments for segment reporting purposes. Management uses core operating earnings, core operating margin and core earnings per share for purposes of evaluating and forecasting underlying business performance. Management believes these core earnings measures provide investors additional insights into operational performance as they exclude unallocated pension and post-retirement costs, which primarily represent costs driven by market factors and costs not allocable to government contracts. A reconciliation between the GAAP and non-GAAP measures is provided on page 14.
Operating Cash Flow Before Pension Contributions
Operating cash flow before pension contributions is defined as GAAP operating cash flow less pension contributions. Management believes operating cash flow before pension contributions provides additional insights into underlying business performance. Management uses operating cash flow before pension contributions as a measure to assess both business performance and overall liquidity. Table 2 provides a reconciliation between GAAP operating cash flow and operating cash flow before pension contributions.
Free Cash Flow
Free cash flow is defined as GAAP operating cash flow less capital expenditures for property, plant and equipment additions. Management believes free cash flow provides investors with an important perspective on the cash available for shareholders, debt repayment, and acquisitions after making the capital investments required to support ongoing business operations and long term value creation. Free cash flow does not represent the residual cash flow available for discretionary expenditures as it excludes certain mandatory expenditures such as repayment of maturing debt. Management uses free cash flow as a measure to assess both business performance and overall liquidity. Table 2 provides a reconciliation between GAAP operating cash flow and free cash flow.

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 or natural disasters; (19) work stoppages or other labor disruptions; (20) significant changes in discount rates and actual investment return on pension assets; (21) potential environmental liabilities; and (22) threats to the security of our or our customers’ information.
Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Any forward-looking statement speaks only as of the date on which it is made, and we assume no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.

# # #
Contact:
 
 
 
Investor Relations:
  
Troy Lahr or Matt Welch (312) 544-2140

Communications:
  
Chaz Bickers (312) 544-2002


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)
2014

 
2013

 
2014

 
2013

Sales of products

$37,542

 

$35,556

 

$19,527

 

$19,238

Sales of services
4,968

 
5,152

 
2,518

 
2,577

Total revenues
42,510

 
40,708

 
22,045

 
21,815


 
 
 
 
 
 
 
Cost of products
(31,932
)
 
(30,165
)
 
(16,674
)
 
(16,437
)
Cost of services
(3,999
)
 
(4,004
)
 
(1,979
)
 
(1,995
)
Boeing Capital interest expense
(35
)
 
(37
)
 
(17
)
 
(18
)
Total costs and expenses
(35,966
)
 
(34,206
)
 
(18,670
)
 
(18,450
)

6,544

 
6,502

 
3,375

 
3,365

Income from operating investments, net
120

 
88

 
61

 
43

General and administrative expense
(1,795
)
 
(1,900
)
 
(918
)
 
(929
)
Research and development expense, net
(1,542
)
 
(1,468
)
 
(733
)
 
(763
)
Gain on dispositions, net
2

 
22

 
2

 


Earnings from operations
3,329

 
3,244

 
1,787

 
1,716

Other income, net
20

 
22

 
11

 
13

Interest and debt expense
(173
)
 
(195
)
 
(81
)
 
(96
)
Earnings before income taxes
3,176

 
3,071

 
1,717

 
1,633

Income tax expense
(558
)
 
(878
)
 
(64
)
 
(546
)
Net earnings from continuing operations
2,618

 
2,193

 
1,653

 
1,087

Net gain on disposal of discontinued operations, net of taxes of $0, $0, $0 and $0


 
1

 


 
1

Net earnings

$2,618

 

$2,194

 

$1,653

 

$1,088

Basic earnings per share from continuing operations

$3.55

 

$2.88

 

$2.26

 

$1.43

Net gain on disposal of discontinued operations, net of taxes

 

 

 

Basic earnings per share

$3.55

 

$2.88

 

$2.26

 

$1.43

Diluted earnings per share from continuing operations

$3.50

 

$2.85

 

$2.24

 

$1.41

Net gain on disposal of discontinued operations, net of taxes

 

 

 

Diluted earnings per share

$3.50

 

$2.85

 

$2.24

 

$1.41

Cash dividends paid per share

$1.46

 

$0.97

 

$0.73

 

$0.485

Weighted average diluted shares (millions)
747.4

 
770.1

 
740.1

 
771.8



9




The Boeing Company and Subsidiaries
Consolidated Statements of Financial Position
(Unaudited) 
(Dollars in millions, except per share data)
June 30
2014

 
December 31
2013

Assets
 
 
 
Cash and cash equivalents

$7,533

 

$9,088

Short-term and other investments
3,797

 
6,170

Accounts receivable, net
7,694

 
6,546

Current portion of customer financing, net
237

 
344

Deferred income taxes
15

 
14

Inventories, net of advances and progress billings
46,251

 
42,912

Total current assets
65,527

 
65,074

Customer financing, net
3,180

 
3,627

Property, plant and equipment, net of accumulated depreciation of $15,424 and $15,070
10,449

 
10,224

Goodwill
5,139

 
5,043

Acquired intangible assets, net
3,004

 
3,052

Deferred income taxes
2,664

 
2,939

Investments
1,196

 
1,204

Other assets, net of accumulated amortization of $420 and $448
1,578

 
1,500

Total assets

$92,737

 

$92,663

Liabilities and equity

 

Accounts payable

$11,060

 

$9,498

Accrued liabilities
13,222

 
14,131

Advances and billings in excess of related costs
21,244

 
20,027

Deferred income taxes and income taxes payable
6,222

 
6,267

Short-term debt and current portion of long-term debt
1,591

 
1,563

Total current liabilities
53,339

 
51,486

Accrued retiree health care
6,506

 
6,528

Accrued pension plan liability, net
9,812

 
10,474

Non-current income taxes payable
740

 
156

Other long-term liabilities
864

 
950

Long-term debt
7,292

 
8,072

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
4,524

 
4,415

Treasury stock, at cost – 290,904,517 and 264,882,461 shares
(21,381
)
 
(17,671
)
Retained earnings
34,516

 
32,964

Accumulated other comprehensive loss
(8,659
)
 
(9,894
)
Total shareholders’ equity
14,061

 
14,875

Noncontrolling interests
123

 
122

Total equity
14,184

 
14,997

Total liabilities and equity

$92,737

 

$92,663




10



The Boeing Company and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
 
Six months ended June 30
(Dollars in millions)
2014

 
2013

Cash flows – operating activities:
 
 
 
Net earnings

$2,618

 

$2,194

Adjustments to reconcile net earnings to net cash provided by operating activities:
 
 
 
Non-cash items – 
 
 
 
Share-based plans expense
101

 
107

Depreciation and amortization
900

 
865

Investment/asset impairment charges, net
36

 
26

Customer financing valuation benefit
(26
)
 
(5
)
Gain on disposal of discontinued operations


 
(1
)
Gain on dispositions, net
(2
)
 
(22
)
Other charges and credits, net
87

 
31

Excess tax benefits from share-based payment arrangements
(97
)
 
(47
)
Changes in assets and liabilities – 
 
 
 
Accounts receivable
(1,286
)
 
(550
)
Inventories, net of advances and progress billings
(3,402
)
 
(2,614
)
Accounts payable
1,783

 
848

Accrued liabilities
(913
)
 
(682
)
Advances and billings in excess of related costs
1,217

 
1,472

Income taxes receivable, payable and deferred
394

 
608

Other long-term liabilities
(88
)
 
(60
)
Pension and other postretirement plans
1,118

 
1,638

Customer financing, net
466

 
188

Other
15

 
(5
)
Net cash provided by operating activities
2,921

 
3,991

Cash flows – investing activities:
 
 
 
Property, plant and equipment additions
(946
)
 
(976
)
Property, plant and equipment reductions
17

 
44

Acquisitions, net of cash acquired
(163
)
 
(26
)
Contributions to investments
(5,657
)
 
(7,045
)
Proceeds from investments
8,030

 
4,632

Net cash provided/(used) by investing activities
1,281

 
(3,371
)
Cash flows – financing activities:
 
 
 
New borrowings
85

 
531

Debt repayments
(854
)
 
(1,361
)
Payments to noncontrolling interests
(12
)
 


Repayments of distribution rights and other asset financing
(184
)
 
(139
)
Stock options exercised, other
261

 
484

Excess tax benefits from share-based payment arrangements
97

 
47

Employee taxes on certain share-based payment arrangements
(88
)
 
(57
)
Common shares repurchased
(3,998
)
 
(1,000
)
Dividends paid
(1,071
)
 
(735
)
Net cash used by financing activities
(5,764
)
 
(2,230
)
Effect of exchange rate changes on cash and cash equivalents
7

 
(37
)
Net decrease in cash and cash equivalents
(1,555
)
 
(1,647
)
Cash and cash equivalents at beginning of year
9,088

 
10,341

Cash and cash equivalents at end of period

$7,533

 

$8,694




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)
2014

 
2013

 
2014

 
2013

Revenues:
 
 
 
 
 
 
 
Commercial Airplanes

$27,041

 

$24,314

 

$14,304

 

$13,624

Defense, Space & Security:
 
 
 
 
 
 
 
Boeing Military Aircraft
6,981

 
7,621

 
3,523

 
3,641

Network & Space Systems
3,796

 
4,009

 
1,920

 
2,049

Global Services & Support
4,603

 
4,666

 
2,304

 
2,496

Total Defense, Space & Security
15,380

 
16,296

 
7,747

 
8,186

Boeing Capital
172

 
209

 
90

 
104

Other segment
42

 
54

 
22

 
27

Unallocated items and eliminations
(125
)
 
(165
)
 
(118
)
 
(126
)
Total revenues

$42,510

 

$40,708

 

$22,045

 

$21,815

Earnings from operations:
 
 
 
 
 
 
 
Commercial Airplanes

$3,052

 

$2,672

 

$1,550

 

$1,453

Defense, Space & Security:
 
 
 
 
 
 
 
Boeing Military Aircraft
497

 
813

 
165

 
386

Network & Space Systems
318

 
293

 
150

 
137

Global Services & Support
545

 
502

 
267

 
253

Total Defense, Space & Security
1,360

 
1,608

 
582

 
776

Boeing Capital
77

 
63

 
33

 
19

Other segment
(110
)
 
(101
)
 
(48
)
 
(43
)
Unallocated items and eliminations
(1,050
)
 
(998
)
 
(330
)
 
(489
)
Earnings from operations
3,329

 
3,244

 
1,787

 
1,716

Other income, net
20

 
22

 
11

 
13

Interest and debt expense
(173
)
 
(195
)
 
(81
)
 
(96
)
Earnings before income taxes
3,176

 
3,071

 
1,717

 
1,633

Income tax expense
(558
)
 
(878
)
 
(64
)
 
(546
)
Net earnings from continuing operations
2,618

 
2,193

 
1,653

 
1,087

Net gain on disposal of discontinued operations, net of taxes of $0, $0, $0 and $0
 
 
1

 
 
 
1

Net earnings

$2,618

 

$2,194

 

$1,653

 

$1,088

 
 
 
 
 
 
 
 
Research and development expense, net:
 
 
 
 
 
 
 
Commercial Airplanes

$970

 

$865

 

$441

 

$446

Defense, Space & Security
577

 
579

 
297

 
307

Other
(5
)
 
24

 
(5
)
 
10

Total research and development expense, net

$1,542

 

$1,468

 

$733

 

$763

 
 
 
 
 
 
 
 
Unallocated items and eliminations:
 
 
 
 
 
 
 
Share-based plans

($44
)
 

($53
)
 

($20
)
 

($22
)
Deferred compensation
(19
)
 
(102
)
 
(26
)
 
(46
)
Amortization of previously capitalized interest
(36
)
 
(34
)
 
(18
)
 
(17
)
Eliminations and other
(194
)
 
(158
)
 
(62
)
 
(92
)
 Sub-total (included in core operating earnings)
(293
)
 
(347
)
 
(126
)
 
(177
)
Pension
(804
)
 
(689
)
 
(228
)
 
(331
)
Postretirement
47

 
38

 
24

 
19

Total unallocated items and eliminations

($1,050
)
 

($998
)
 

($330
)
 

($489
)

12



The Boeing Company and Subsidiaries
Operating and Financial Data
(Unaudited)
 
 
Deliveries
 
Six months ended June 30
 
Three months ended June 30
Commercial Airplanes
 
2014

 
2013

 
2014

 
2013

 
737
 
239

 
218

 
124

 
116

 
747
 
6

 
12

 
2

 
6

 
767
 
1

 
12

 
1

 
8

 
777
 
48

 
47

 
24

 
23

 
787
 
48

 
17

(1)
30

 
16

(1)
Total
 
342

 
306

 
181

 
169

 
Note: Deliveries under operating lease are identified by parentheses.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Defense, Space & Security
 
 
 
 
 
 
 
 
 
Boeing Military Aircraft
 
 
 
 
 
 
 
 
 
F/A-18 Models
 
23

 
24

 
12

 
12

 
F-15E Eagle
 
8

 
3

 
4

 


 
C-17 Globemaster III
 
5

 
6

 
2

 
3

 
CH-47 Chinook
 
32

 
17

 
15

 
8

 
AH-64 Apache
 
19

 
20

 
9

 
5

 
P-8 Models
 
2

 
5

 
2

 
3

 
 
 
 
 
 
 
 
 
 
 
Global Services & Support
 
 
 
 
 
 
 
 
 
AEW&C
 
2

 


 
1

 


 
 
 
 
 
 
 
 
 
 
 
Network & Space Systems
 
 
 
 
 
 
 
 
 
Commercial and Civil Satellites
 
2

 
1
 
2

 

 
 
 
 
 
 
 
 
 
 
 
Contractual backlog (Dollars in billions)
 
June 30
2014

 
March 31
2014

 
December 31
2013

Commercial Airplanes
 

$376.3

 

$374.0

 

$373.0

Defense, Space & Security:
 
 
 
 
 
 
Boeing Military Aircraft
 
23.8

 
23.2

 
23.6

Network & Space Systems
 
9.6

 
9.4

 
9.8

Global Services & Support
 
16.3

 
16.1

 
16.2

Total Defense, Space & Security
 
49.7

 
48.7

 
49.6

Total contractual backlog
 

$426.0

 

$422.7

 

$422.6

Unobligated backlog
 

$14.3

 

$17.1

 

$18.3

Total backlog
 

$440.3

 

$439.8

 

$440.9

Workforce
 
169,300

 
169,000

 
168,400



13




The Boeing Company and Subsidiaries
Reconciliation of Non-GAAP Measures
Core Operating Earnings, Core Operating Margin and Core Earnings Per Share
(Unaudited)

The tables provided below reconcile the non-GAAP financial measures core operating earnings, core operating margin and core earnings per share with the most directly comparable GAAP financial measures, earnings from operations, operating margin and diluted earnings per share. See page 7 of this release for additional information on the use of these non-GAAP financial measures.

Second Quarter
 
First Half
 
Guidance
  
2014
 
2013
 
2014
 
2013
 
2014
Revenues

$22,045

 

$21,815

 

$42,510

 

$40,708

 
 
 
 
 
 
 
 
 
 
 
 
GAAP Earnings From Operations

$1,787

 

$1,716

 

$3,329

 

$3,244

 
 
GAAP Operating Margin
8.1
%
 
7.9
%
 
7.8
%
 
8.0
%
 
 
 
 
 
 
 
 
 
 
 
 
Unallocated Pension/Postretirement Expense

$204

 

$312

 

$757

 

$651

 
~ $1,200

Core Operating Earnings (non-GAAP)

$1,991

 

$2,028

 

$4,086

 

$3,895

 
 
Core Operating Margin (non-GAAP)
9.0
%
 
9.3
%
 
9.6
%
 
9.6
%
 
 
 
 
 
 
 
 
 
 
 
 
Increase/(Decrease) in GAAP Earnings From Operations
4
%
 
 
 
3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Diluted Earnings Per Share

$2.24

 

$1.41

 

$3.50

 

$2.85

 
$6.85 - $7.05

Unallocated Pension/Postretirement Expense1

$0.18

 

$0.26

 

$0.66

 

$0.55

 

$1.05

Core Earnings Per Share (non-GAAP)

$2.42

 

$1.67

 

$4.16

 

$3.40

 
$7.90 - $8.10

 
 
 
 
 
 
 
 
 
 
Weighted Average Diluted Shares (millions)
740.1

 
771.8

 
747.4

 
770.1

 
~ 740

Increase in GAAP Earnings Per Share
59
%
 
 
 
23
%
 
 
 


Increase in Core Earnings Per Share
45
%
 
 
 
22
%
 
 
 



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


14
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