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 22, 2015
 
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 22, 2015, The Boeing Company issued a press release reporting its financial results for the second quarter of 2015. 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 22, 2015, reporting Boeing's financial results for the second quarter of 2015, 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 22, 2015
 
 

          


3


EXHIBIT INDEX


Exhibit
Number
 
Description
99.1
 
Press release issued by The Boeing Company dated July 22, 2015, reporting Boeing’s financial results for the second quarter of 2015, 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 11 percent to $24.5 billion reflecting record commercial deliveries
▪
Core EPS (non-GAAP)* of $1.62; GAAP EPS of $1.59
▪
Strong operating cash flow of $3.3 billion on higher volume and improved productivity
▪
Backlog remains strong at $489 billion with nearly 5,700 commercial airplane orders
▪
Repurchased 14 million shares for $2.0 billion
▪
Cash & marketable securities of $9.6 billion provide strong liquidity
▪
EPS guidance updated for KC-46 charge that offset strong performance; cash guidance unchanged
Table 1. Summary Financial Results
 
Second Quarter
 
 
 
First Half
 
 
(Dollars in Millions, except per share data)
 
2015
 
2014
 
Change
 
2015
 
2014
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 

$24,543

 

$22,045

 
11%

 

$46,692

 

$42,510

 
10%

 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP*
 
 
 
 
 
 
 
 
 
 
 
 
Core Operating Earnings
 

$1,713

 

$1,991

 
(14)%

 

$3,845

 

$4,086

 
(6)%

Core Operating Margin
 
7.0
%
 
9.0
%
 
(2.0) Pts

 
8.2
%
 
9.6
%
 
(1.4) Pts

Core Earnings Per Share
 

$1.62

 

$2.42

 
(33)%

 

$3.59

 

$4.16

 
(14)%

GAAP
 
 
 
 
 
 
 
 
 
 
 
 
Earnings From Operations
 

$1,683

 

$1,787

 
(6)%

 

$3,702

 

$3,329

 
11%

Operating Margin
 
6.9
%
 
8.1
%
 
(1.2) Pts

 
7.9
%
 
7.8
%
 
0.1 Pts

Net Earnings
 

$1,110

 

$1,653

 
(33)%

 

$2,446

 

$2,618

 
(7)%

Earnings Per Share
 

$1.59

 

$2.24

 
(29)%

 

$3.46

 

$3.50

 
(1)%

Operating Cash Flow
 

$3,297

 

$1,809

 
82%

 

$3,385

 

$2,921

 
16%

* Non-GAAP measures. Complete definitions of Boeing’s non-GAAP measures are on page 6, “Non-GAAP Measures Disclosures.”     

CHICAGO, July 22, 2015 – The Boeing Company [NYSE: BA] reported second-quarter revenue increased 11 percent to $24.5 billion on record commercial deliveries (Table 1). Second quarter 2015 results included the previously announced $536 million after-tax charge ($0.77 per share) on the KC-46 Tanker program reflecting higher estimated costs. Core earnings per share (non-GAAP)* guidance for 2015 has been adjusted to between $7.70 and $7.90 per share, from $8.20 and $8.40, to reflect the impact of the second quarter 2015 KC-46 Tanker charge ($0.77 per share), partially offset by strong performance ($0.27 per share). GAAP earnings per share has been adjusted to between $7.60 and $7.80, from $8.10 and $8.30.    

1



“Record commercial airplane deliveries to customers worldwide drove solid revenue growth, and the strength of our overall portfolio and diligent focus produced significant operating cash flow during the quarter,” said Boeing President and Chief Executive Officer Dennis Muilenburg.  “Strong operating performance across our commercial and defense production programs partially offset the tanker charge and enabled us to maintain our commitments to return cash to our shareholders and invest in innovation and our people.”
“Overall, our outlook for the second half of the year remains positive.  On the tanker program, we are investing the necessary resources to keep this vitally important program on schedule for our customer. We have a clear understanding of the work to be done and we are confident that the long-term financial value of the program will reward our additional investment." 
“With our sustained focus on productivity and growth, we will continue to profitably deliver on our large and diverse backlog, capture new orders, and deliver increasing value to all of our stakeholders.”
Table 2. Cash Flow
 
Second Quarter
 
First Half
(Millions)
 
2015
 
2014
 
2015
 
2014
Operating Cash Flow
 

$3,297

 

$1,809

 

$3,385

 

$2,921

Less Additions to Property, Plant & Equipment
 

($692
)
 

($449
)
 

($1,266
)
 

($946
)
Free Cash Flow*
 

$2,605

 

$1,360

 

$2,119

 

$1,975

Operating cash flow in the quarter was $3.3 billion, reflecting commercial airplane production rates and strong operating performance (Table 2). During the quarter, the company repurchased 14 million shares for $2.0 billion, leaving $7.5 billion remaining under the current repurchase authorization which is expected to be completed over approximately the next two years. The company also paid $0.6 billion in dividends in the quarter, reflecting an approximately 25 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 15
 
Q1 15
Cash
 

$9.1

 

$8.6

Marketable Securities1
 

$0.5

 

$1.0

Total
 

$9.6

 

$9.6

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

$6.6

 

$6.6

Boeing Capital, including intercompany loans
 

$2.4

 

$2.4

Total Consolidated Debt
 

$9.0

 

$9.0

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

Cash and investments in marketable securities totaled $9.6 billion and debt totaled $9.0 billion, both unchanged from the beginning of the quarter (Table 3).
Total company backlog at quarter-end was $489 billion, down from $495 billion at the beginning of the quarter, and included net orders for the quarter of $18 billion.


2



Segment Results
Commercial Airplanes
Table 4. Commercial Airplanes
 
Second Quarter
 
 
 
First Half
 
 
(Dollars in Millions)
 
2015
 
2014
 
Change
 
2015
 
2014
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial Airplanes Deliveries
 
197

 
181

 
9%

 
381

 
342

 
11%

 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 

$16,877

 

$14,304

 
18%

 

$32,258

 

$27,041

 
19%

Earnings from Operations
 

$1,206

 

$1,550

 
(22)%

 

$2,823

 

$3,052

 
(8) %

Operating Margin
 
7.1
%
 
10.8
%
 
(3.7) Pts

 
8.8
%
 
11.3
%
 
(2.5) Pts

Commercial Airplanes second-quarter revenue increased 18 percent to $16.9 billion on higher delivery volume and mix (Table 4). Second-quarter operating margin was 7.1 percent, reflecting the previously announced $513 million pre-tax charge on the KC-46 Tanker program and the dilutive impact of higher 787 and 747 deliveries partially offset by strong performance on production programs.
During the quarter, Commercial Airplanes captured orders for 116 737 MAX airplanes. The 737 program has won over 2,800 firm orders for the 737 MAX since launch. Also during the quarter, the company started assembly of the first 737 MAX airplane and the 787-10 program completed its Critical Design Review which indicated the program’s design is sound and development is on schedule.
Commercial Airplanes booked 171 net orders during the quarter. Backlog remains strong with nearly 5,700 airplanes valued at $431 billion.
Defense, Space & Security
Table 5. Defense, Space & Security
 
Second Quarter
 
 
 
First Half
 
 
(Dollars in Millions)
 
2015
 
2014
 
Change
 
2015
 
2014
 
Change
Revenues1
 
 
 
 
 
 
 
 
 
 
 
 
Boeing Military Aircraft
 

$3,488

 

$3,520

 
(1)%

 

$6,232

 

$6,975

 
(11)%

Network & Space Systems
 

$1,938

 

$1,920

 
1%

 

$3,670

 

$3,796

 
(3)%

Global Services & Support
 

$2,118

 

$2,307

 
(8)%

 

$4,351

 

$4,609

 
(6)%

Total BDS Revenues
 

$7,544

 

$7,747

 
(3)%

 

$14,253

 

$15,380

 
(7)%

Earnings from Operations1
 
 
 
 
 
 
 
 
 
 
 
 
Boeing Military Aircraft
 

$123

 

$164

 
(25)%

 

$384

 

$496

 
(23)%

Network & Space Systems
 

$151

 

$150

 
1%

 

$318

 

$318

 
—

Global Services & Support
 

$272

 

$268

 
1%

 

$587

 

$546

 
8%

Total BDS Earnings from Operations
 

$546

 

$582

 
(6)%

 

$1,289

 

$1,360

 
(5)%

Operating Margin
 
7.2
%
 
7.5
%
 
(0.3) Pts

 
9.0
%
 
8.8
%
 
0.2 Pts

1 During the first quarter of 2015, certain programs were realigned between Boeing Military Aircraft and Global Services & Support.
Defense, Space & Security’s second-quarter revenue was $7.5 billion. Second quarter operating margin was 7.2 percent, reflecting the previously announced $322 million pre-tax charge recorded at BMA on the KC-46 Tanker program partially offset by strong performance on production programs and mix (Table 5).
Boeing Military Aircraft (BMA) second-quarter revenue was $3.5 billion, reflecting planned timing of deliveries and mix. Operating margin was 3.5 percent, reflecting the KC-46 Tanker program charge partially offset

3



by strong performance on production programs. During the quarter, BMA was awarded contracts for six C-17 Globemaster III airlifters.
Network & Space Systems (N&SS) second-quarter revenue was $1.9 billion and operating margin was unchanged at 7.8 percent. During the quarter, NASA awarded Boeing the first ever commercial contract for a human spaceflight mission as part of the existing Commercial Crew contract.
Global Services & Support (GS&S) second-quarter revenue was $2.1 billion, reflecting lower volume in Aircraft Modernization and Sustainment. Operating margin increased to 12.8 percent on improved program mix. During the quarter, GS&S was awarded an F-15 international services contract extension.  
Backlog at Defense, Space & Security was $58 billion, of which 39 percent represents orders from international customers.
Additional Financial Information
Table 6. Additional Financial Information
 
Second Quarter
 
First Half
(Dollars in Millions)
 
2015
 
2014
 
2015
 
2014
Revenues
 
 
 
 
 
 
 
 
Boeing Capital
 

$115

 

$90

 

$201

 

$172

Unallocated items, eliminations and other
 

$7

 

($96
)
 

($20
)
 

($83
)
Earnings from Operations
 
 
 
 
 
 
 
 
Boeing Capital
 

$11

 

$33

 

$31

 

$77

Unallocated pension/postretirement
 

($30
)
 

($204
)
 

($143
)
 

($757
)
Other unallocated items and eliminations
 

($50
)
 

($174
)
 

($298
)
 

($403
)
Other income, net
 

$15

 

$11

 

$3

 

$20

Interest and debt expense
 

($75
)
 

($81
)
 

($136
)
 

($173
)
Effective tax rate
 
31.6
%
 
3.7
%
 
31.5
%
 
17.6
%
At quarter-end, Boeing Capital's net portfolio balance was $3.3 billion, down from $3.4 billion at the beginning of the quarter (Table 6). Total pension expense for the second quarter was $523 million, down from $693 million in the same period of the prior year. Other unallocated items and eliminations totaled $50 million at quarter end, down from $174 million in the same period of the prior year, primarily due to lower elimination of intercompany profit and deferred compensation expense. The company's effective income tax rate was 31.6 percent at quarter end, up from 3.7 percent in the same period of the prior year. The second quarter 2014 effective income tax rate included $524 million in tax benefits.


4



Outlook
The company’s 2015 financial and delivery guidance (Table 7) reflects the impact of the KC-46 Tanker charge and continued strong performance across the company.
Table 7. 2015 Financial Outlook
Current
 
Prior
(Dollars in Billions, except per share data)
Guidance
 
Guidance
 
 
 
 
The Boeing Company
 
 
 
Revenue
$94.5 - 96.5
 
$94.5 - 96.5
Core Earnings Per Share*
$7.70 - 7.90
 
$8.20 - 8.40
GAAP Earnings Per Share
$7.60 - 7.80
 
$8.10 - 8.30
Operating Cash Flow
> $9
 
> $9
 
 
 
 
Commercial Airplanes
 
 
 
Deliveries
750 - 755
 
750 - 755
Revenue
$64.5 - 65.5
 
$64.5 - 65.5
Operating Margin
~9.0%
 
9.5% - 10.0%
 
 
 
 
Defense, Space & Security (revised for business realignment)
 
 
 
Revenue
 
 
 
Boeing Military Aircraft
~$12.5
 
~$12.5
Network & Space Systems
~$8.0
 
~$8.0
Global Services & Support
~$9.5
 
~$9.5
 
 
 
 
Total BDS Revenue
$29.5 - 30.5
 
$29.5 - 30.5
 
 
 
 
Operating Margin
 
 
 
Boeing Military Aircraft
~8%
 
~9.5%
Network & Space Systems
~9.0%
 
~9.0%
Global Services & Support
~11.5%
 
~11.0%
 
 
 
 
Total BDS Operating Margin
~9.5%
 
9.75% - 10.0%
 
 
 
 
Boeing Capital
 
 
 
Portfolio Size
Stable
 
Stable
Revenue
~$0.3
 
~$0.3
Pre-Tax Earnings
~$0.05
 
~$0.05
 
 
 
 
Research & Development
~ $3.5
 
~ $3.5
Capital Expenditures
~ $2.8
 
~ $2.8
Pension Expense 1
~ $2.1
 
~ $2.1
Effective Tax Rate 2
~ 29.0%
 
~ 30.5%
1 Approximately $0.3 billion is expected to be recorded in unallocated items and eliminations
2 Assumes the extension of the research and development tax credit
*    Non-GAAP measures. Complete definitions of Boeing’s non-GAAP measures are on page 6, “Non-GAAP Measures Disclosures.”


5



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 13.
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.

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 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 Rob Martin (312) 544-2140

Communications:
  
Bernard Choi (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)
2015

 
2014

 
2015

 
2014

Sales of products

$41,408

 

$37,542

 

$21,923

 

$19,527

Sales of services
5,284

 
4,968

 
2,620

 
2,518

Total revenues
46,692

 
42,510

 
24,543

 
22,045


 
 
 
 
 
 
 
Cost of products
(35,627
)
 
(31,932
)
 
(19,247
)
 
(16,674
)
Cost of services
(4,186
)
 
(3,999
)
 
(2,086
)
 
(1,979
)
Boeing Capital interest expense
(33
)
 
(35
)
 
(17
)
 
(17
)
Total costs and expenses
(39,846
)
 
(35,966
)
 
(21,350
)
 
(18,670
)

6,846

 
6,544

 
3,193

 
3,375

Income from operating investments, net
129

 
120

 
50

 
61

General and administrative expense
(1,705
)
 
(1,795
)
 
(760
)
 
(918
)
Research and development expense, net
(1,569
)
 
(1,542
)
 
(800
)
 
(733
)
Gain on dispositions, net
1

 
2

 


 
2

Earnings from operations
3,702

 
3,329

 
1,683

 
1,787

Other income, net
3

 
20

 
15

 
11

Interest and debt expense
(136
)
 
(173
)
 
(75
)
 
(81
)
Earnings before income taxes
3,569

 
3,176

 
1,623

 
1,717

Income tax expense
(1,123
)
 
(558
)
 
(513
)
 
(64
)
Net earnings

$2,446

 

$2,618

 

$1,110

 

$1,653

 
 
 
 
 
 
 
 
Basic earnings per share

$3.50

 

$3.55

 

$1.61

 

$2.26

 
 
 
 
 
 
 
 
Diluted earnings per share

$3.46

 

$3.50

 

$1.59

 

$2.24

 
 
 
 
 
 
 
 
Cash dividends paid per share

$1.82

 

$1.46

 

$0.91

 

$0.73

 
 
 
 
 
 
 
 
Weighted average diluted shares (millions)
706.6

 
747.4

 
698.9

 
740.1



8




The Boeing Company and Subsidiaries
Consolidated Statements of Financial Position
(Unaudited) 
(Dollars in millions, except per share data)
June 30
2015

 
December 31
2014

Assets
 
 
 
Cash and cash equivalents

$9,157

 

$11,733

Short-term and other investments
468

 
1,359

Accounts receivable, net
7,927

 
7,729

Current portion of customer financing, net
209

 
190

Deferred income taxes
17

 
18

Inventories, net of advances and progress billings
49,028

 
46,756

Total current assets
66,806

 
67,785

Customer financing, net
3,175

 
3,371

Property, plant and equipment, net of accumulated depreciation of $15,997 and $15,689
11,338

 
11,007

Goodwill
5,126

 
5,119

Acquired intangible assets, net
2,763

 
2,869

Deferred income taxes
6,264

 
6,576

Investments
1,256

 
1,154

Other assets, net of accumulated amortization of $419 and $479
1,374

 
1,317

Total assets

$98,102

 

$99,198

Liabilities and equity

 

Accounts payable

$11,531

 

$10,667

Accrued liabilities
13,226

 
13,343

Advances and billings in excess of related costs
23,373

 
23,175

Deferred income taxes and income taxes payable
8,894

 
8,603

Short-term debt and current portion of long-term debt
112

 
929

Total current liabilities
57,136

 
56,717

Accrued retiree health care
6,777

 
6,802

Accrued pension plan liability, net
17,537

 
17,182

Non-current income taxes payable
389

 
358

Other long-term liabilities
1,052

 
1,208

Long-term debt
8,904

 
8,141

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
4,721

 
4,625

Treasury stock, at cost – 331,193,968 and 305,533,606 shares
(27,463
)
 
(23,298
)
Retained earnings
37,365

 
36,180

Accumulated other comprehensive loss
(13,420
)
 
(13,903
)
Total shareholders’ equity
6,264

 
8,665

Noncontrolling interests
43

 
125

Total equity
6,307

 
8,790

Total liabilities and equity

$98,102

 

$99,198




9



The Boeing Company and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
 
Six months ended June 30
(Dollars in millions)
2015

 
2014

Cash flows – operating activities:
 
 
 
Net earnings

$2,446

 

$2,618

Adjustments to reconcile net earnings to net cash provided by operating activities:
 
 
 
Non-cash items – 
 
 
 
Share-based plans expense
94

 
101

Depreciation and amortization
912

 
900

Investment/asset impairment charges, net
74

 
36

Customer financing valuation benefit
(5
)
 
(26
)
Gain on dispositions, net
(1
)
 
(2
)
Other charges and credits, net
140

 
87

Excess tax benefits from share-based payment arrangements
(124
)
 
(97
)
Changes in assets and liabilities – 
 
 
 
Accounts receivable
(313
)
 
(1,286
)
Inventories, net of advances and progress billings
(2,395
)
 
(3,402
)
Accounts payable
888

 
1,783

Accrued liabilities
(177
)
 
(913
)
Advances and billings in excess of related costs
195

 
1,217

Income taxes receivable, payable and deferred
482

 
394

Other long-term liabilities
(17
)
 
(88
)
Pension and other postretirement plans
1,244

 
1,118

Customer financing, net
19

 
466

Other
(77
)
 
15

Net cash provided by operating activities
3,385

 
2,921

Cash flows – investing activities:
 
 
 
Property, plant and equipment additions
(1,266
)
 
(946
)
Property, plant and equipment reductions
20

 
17

Acquisitions, net of cash acquired
(23
)
 
(163
)
Contributions to investments
(1,205
)
 
(5,657
)
Proceeds from investments
2,040

 
8,030

Other
22

 


Net cash (used)/provided by investing activities
(412
)
 
1,281

Cash flows – financing activities:
 
 
 
New borrowings
761

 
85

Debt repayments
(846
)
 
(854
)
Repayments of distribution rights and other asset financing


 
(184
)
Stock options exercised
276

 
261

Excess tax benefits from share-based payment arrangements
124

 
97

Employee taxes on certain share-based payment arrangements
(90
)
 
(88
)
Common shares repurchased
(4,501
)
 
(3,998
)
Dividends paid
(1,264
)
 
(1,071
)
Other


 
(12
)
Net cash used by financing activities
(5,540
)
 
(5,764
)
Effect of exchange rate changes on cash and cash equivalents
(9
)
 
7

Net decrease in cash and cash equivalents
(2,576
)
 
(1,555
)
Cash and cash equivalents at beginning of year
11,733

 
9,088

Cash and cash equivalents at end of period

$9,157

 

$7,533




10



The Boeing Company and Subsidiaries
Summary of Business Segment Data
(Unaudited)
 
Six months ended June 30
 
Three months ended June 30
(Dollars in millions)
2015

 
2014

 
2015

 
2014

Revenues:
 
 
 
 
 
 
 
Commercial Airplanes

$32,258

 

$27,041

 

$16,877

 

$14,304

Defense, Space & Security:
 
 
 
 
 
 
 
Boeing Military Aircraft
6,232

 
6,975

 
3,488

 
3,520

Network & Space Systems
3,670

 
3,796

 
1,938

 
1,920

Global Services & Support
4,351

 
4,609

 
2,118

 
2,307

Total Defense, Space & Security
14,253

 
15,380

 
7,544

 
7,747

Boeing Capital
201

 
172

 
115

 
90

Unallocated items, eliminations and other
(20
)
 
(83
)
 
7

 
(96
)
Total revenues

$46,692

 

$42,510

 

$24,543

 

$22,045

Earnings from operations:
 
 
 
 
 
 
 
Commercial Airplanes

$2,823

 

$3,052

 

$1,206

 

$1,550

Defense, Space & Security:
 
 
 
 
 
 
 
Boeing Military Aircraft
384

 
496

 
123

 
164

Network & Space Systems
318

 
318

 
151

 
150

Global Services & Support
587

 
546

 
272

 
268

Total Defense, Space & Security
1,289

 
1,360

 
546

 
582

Boeing Capital
31

 
77

 
11

 
33

Unallocated items, eliminations and other
(441
)
 
(1,160
)
 
(80
)
 
(378
)
Earnings from operations
3,702

 
3,329

 
1,683

 
1,787

Other income, net
3

 
20

 
15

 
11

Interest and debt expense
(136
)
 
(173
)
 
(75
)
 
(81
)
Earnings before income taxes
3,569

 
3,176

 
1,623

 
1,717

Income tax expense
(1,123
)
 
(558
)
 
(513
)
 
(64
)
Net earnings

$2,446

 

$2,618

 

$1,110

 

$1,653

 
 
 
 
 
 
 
 
Research and development expense, net:
 
 
 
 
 
 
 
Commercial Airplanes

$1,097

 

$970

 

$554

 

$441

Defense, Space & Security
474

 
577

 
250

 
297

Other
(2
)
 
(5
)
 
(4
)
 
(5
)
Total research and development expense, net

$1,569

 

$1,542

 

$800

 

$733

 
 
 
 
 
 
 
 
Unallocated items, eliminations and other:
 
 
 
 
 
 
 
Share-based plans

($37
)
 

($44
)
 

($16
)
 

($20
)
Deferred compensation
(48
)
 
(19
)
 
10

 
(26
)
Amortization of previously capitalized interest
(49
)
 
(36
)
 
(20
)
 
(18
)
Eliminations and other unallocated items
(164
)
 
(304
)
 
(24
)
 
(110
)
Sub-total (included in core operating earnings)
(298
)
 
(403
)
 
(50
)
 
(174
)
Pension
(209
)
 
(804
)
 
(57
)
 
(228
)
Postretirement
66

 
47

 
27

 
24

Total unallocated items, eliminations and other

($441
)
 

($1,160
)
 

($80
)
 

($378
)

11



The Boeing Company and Subsidiaries
Operating and Financial Data
(Unaudited)
 
 
Deliveries
 
Six months ended June 30
 
Three months ended June 30
 
Commercial Airplanes
 
2015

 
2014

 
2015

 
2014

 
737
 
249

 
239

 
128

 
124

 
747
 
9

 
6

 
5

 
2

 
767
 
9

 
1

 
4

 
1

 
777
 
50

 
48

 
26

 
24

 
787
 
64

 
48

 
34

 
30

 
Total
 
381

 
342

 
197

 
181

 
Note: Deliveries under operating lease are identified by parentheses.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Defense, Space & Security
 
 
 
 
 
 
 
 
 
Boeing Military Aircraft
 
 
 
 
 
 
 
 
 
AH-64 Apache (New)
 
12

 
19

 
6

 
9

 
AH-64 Apache (Remanufactured)
 
23

 
25

 
13

 
11

 
C-17 Globemaster III
 
3

 
5

 
2

 
2

 
CH-47 Chinook (New)
 
21

 
32

 
15

 
15

 
CH-47 Chinook (Renewed)
 
5

 


 
1

 
 
 
F-15 Models
 
5

 
8

 
4

 
4

 
F/A-18 Models
 
20

 
23

 
9

 
12

 
P-8 Models
 
6

 
2

 
4

 
2

 
 
 
 
 
 
 
 
 
 
 
Global Services & Support
 
 
 
 
 
 
 
 
 
AEW&C
 


 
2

 


 
1

 
C-40A
 
1

 


 


 


 
 
 
 
 
 
 
 
 
 
 
Network & Space Systems
 
 
 
 
 
 
 
 
 
Commercial and Civil Satellites
 
1

 
2

 
1

 
2

 
Military Satellites
 
1

 

 
1

 

 
 
 
 
 
 
 
 
 
 
 
Contractual backlog (Dollars in billions)
 
June 30
2015

 
March 31
2015

 
December 31
2014

Commercial Airplanes
 

$430.8

 

$435.0

 

$440.1

Defense, Space & Security:
 
 
 
 
 
 
Boeing Military Aircraft
 
22.8

 
21.3

 
21.1

Network & Space Systems
 
9.1

 
9.4

 
8.9

Global Services & Support
 
16.5

 
16.9

 
16.9

Total Defense, Space & Security
 
48.4

 
47.6

 
46.9

Total contractual backlog
 

$479.2

 

$482.6

 

$487.0

Unobligated backlog
 

$9.6

 

$12.5

 

$15.3

Total backlog
 

$488.8

 

$495.1

 

$502.3

Workforce
 
163,500

 
163,100

 
165,500



12




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

The tables provided below reconcile the non-GAAP financial measures core operating earnings, core operating margin and core earnings per share with the most directly comparable GAAP financial measures, earnings from operations, operating margin and diluted earnings per share. See page 6 of this release for additional information on the use of these non-GAAP financial measures.

Second Quarter
 
First Half
 
Guidance
  
2015
 
2014
 
2015
 
2014
 
2015
Revenues

$24,543

 

$22,045

 

$46,692

 

$42,510

 
 
 
 
 
 
 
 
 
 
 
 
GAAP Earnings From Operations

$1,683

 

$1,787

 

$3,702

 

$3,329

 
 
GAAP Operating Margin
6.9
%
 
8.1
%
 
7.9
%
 
7.8
%
 
 
 
 
 
 
 
 
 
 
 
 
Unallocated Pension/Postretirement Expense

$30

 

$204

 

$143

 

$757

 

$110

Core Operating Earnings (non-GAAP)

$1,713

 

$1,991

 

$3,845

 

$4,086

 
 
Core Operating Margin (non-GAAP)
7.0
%
 
9.0
%
 
8.2
%
 
9.6
%
 
 
 
 
 
 
 
 
 
 
 
 
Increase/(Decrease) in GAAP Earnings From Operations
(6
%)
 
 
 
11
%
 
 
 
 
Increase/(Decrease) in Core Operating Earnings (non-GAAP)
(14
%)
 
 
 
(6
%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Diluted Earnings Per Share

$1.59

 

$2.24

 

$3.46

 

$3.50

 
$7.60 - $7.80

Unallocated Pension/Postretirement Expense1

$0.03

 

$0.18

 

$0.13

 

$0.66

 

$0.10

Core Earnings Per Share (non-GAAP)

$1.62

 

$2.42

 

$3.59

 

$4.16

 
$7.70 - $7.90

 
 
 
 
 
 
 
 
 
 
Weighted Average Diluted Shares (millions)
698.9

 
740.1

 
706.6

 
747.4

 
695 - 700

Increase/(Decrease) in GAAP Earnings Per Share
(29
%)
 
 
 
(1
%)
 
 
 


Increase/(Decrease) in Core Earnings Per Share (non-GAAP)
(33
%)
 
 
 
(14
%)
 
 
 



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


13
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